Exchange rate question

Posted on 2011-10-23
Last Modified: 2012-05-12

Not sure if this the right forum for this question here goes. I have a friend who is a marine engineer and he wants me to put something together for stock control. No problems i have done this many times before. This situation is different he buys all his supplies from USA then converts the USA dollar to Australian dollar. My question is Stores are received and converted to current exchange rate. After a time stocks are getting low so more stock is ordered but at a different exchange rate. When We receives the stock we have a situation where we  have some stock at previous exchange rate and now if have stock at a different rate. Any help appreciated. Hope the question is clear

Question by:chestera
    LVL 15

    Expert Comment

    you need to save for each stock the rate on ¿urchase date
    LVL 77

    Accepted Solution

    I don't understand what the queston is.

    Every stock system in the world involves having stock (for the same item) bought at different prices.  Whatever you do to deal with that situation is unaffected by exchange rates.  The exchange rate is just a factor in  determining the price.

    SO first consider the same question ignoring the exchange rate.

    You buy 100 of item A at 100 dollars and later 120 of A at 103 dollars .  How would you deal with that?
    LVL 39

    Assisted Solution

    It is more accounting problem. There are two mainly used methoods:
    1. FIFO (every consignment have own price and it is used in profit calculations)
    2. Mean (price is recalculated ith every incominng consignment): (CurrentPrice*CurrentQty + IncomingPrice*IncomingQty)/(CurrentQty+IncomingQty)
    LVL 77

    Expert Comment

    Ah - if what als315 is actually your question then you have to decide which method to use.
    So I would say that your friend's accountant would probably advise/decide and you would implement their decision.

    Author Comment


    Makes sense thank you. I will leave question for a bit longer


    Author Closing Comment


    Many thanks als315 and Peter57r for you input


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