Uniform Accounting Treatment of Gains and Losses Resulting from Changes in Foreign Exchange Rates

March 9, 1998SEC-EAD * MEMORANDUM CIRCULAR NO. 03-98RE : Uniform Accounting Treatment of Gains and Losses Resulting from Changes in Foreign Exchange RatesIn order to maintain a uniform corporate accounting treatment of income and losses brought about by changes in foreign exchange rates, this Commission prescribes the following accounting procedures for all corporations covered by its regulatory authority. LexLib1. When a corporation maintains a foreign currency deposit or has a foreign currency receivable, and at the same time owes a foreign currency obligation, the peso income on the deposit or receivable resulting from the change in foreign exchange rate shall be offset against the peso losses resulting from such change in rate on the liability account. Should there be an excess loss after the process, the same shall be deferred and charged to income from operation of the following year (in the case where inventories or other current assets were acquired) or amortized over the remaining life of the fixed assets purchased.2. When a company does not have a foreign currency bank account or receivable,...