PURPOSE
To show illustration of money market loan at spot rate where there are two rates on month end date. This is identical to Money Market Loan at Spot Rate except for the use of Alternate Rate for month end revaluation of capital if this is provided.
OVERVIEW
i. Loan revalued at month end using alternate rate.
ii. Expense are reported at spot rate. No revaluation on interest.
iii. Gain and loss arising from foreign exchange movement are analyzed into capital component.a
TRANSACTION DETAILS
| Accounting Base Ccy |
| Trade ID |
| Trade Date |
| Value Date |
| Maturity Date |
| Currency |
| Amount |
| Rate |
| Accrual Method |
| Total Interest |
| Maturity Amount |
| USD |
| MMK1001 |
| 28-Feb-03 |
28-Feb-03 |
3-Apr-03 |
SGD |
| 1,000,000.00 |
5.1232% |
| Act/365 |
4,772.30 |
1,004,772.30 |
SUMMARY OF JOURNALS
| ID | Date | Description |
|---|---|---|
| J1 | 28-Feb-03 | Money Market Loan Start. |
| J2 | 28-Feb-03 | Money Market Month End Accruals. |
| J3 | 1-Mar-03 | Reversal Money Market Month End Accruals. |
| J4 | 31-Mar-03 | Money Market Month End Accruals. |
| J5 | 1-Apr-03 | Reversal Money Market Month End Accruals. |
| J6 | 3-Apr-03 | Money Market Loan Maturity. |
J1 Money Market Loan Start.
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 28-Feb-03 | B | Cash at Bank | SGD | 1,000,000.00 | 0.568919 | USD | 568,918.83 | J1a |
| MMK1001 | 28-Feb-03 | B | MMK-Loan | SGD | -1,000,000.00 | 0.568919 | USD | -568,918.83 | J1b |
Note J1a : The booking rate on 28-Feb 2003 is 1.75772 (multiplier 0.568919).The rate is rounded to 6dp for display. Full precision is used in calculation.
J2 Money Market Month End Accruals.
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 28-Feb-03 | P | MMK- Loan Interest Expense | SGD | 140.36 | 0.568919 | USD | 79.85 | J2a |
| MMK1001 | 28-Feb-03 | B | MMK- Loan Interest Payables | SGD | -140.36 | 0.568919 | USD | -79.85 | J2b |
| MMK1001 | 28-Feb-03 | B | MMK - Loan | SGD | 0.00 | USD | 3,227.98 | J2c | |
| MMK1001 | 28-Feb-03 | P | FX - Unrealised Gains - Capital | SGD | 0.00 | USD | -3,227.98 | J2d |
Note J2a : The spot rate on 28-Feb is 0.568919. See Exchange Rates below. The rate is rounded to 6dp for display. Full precision is used in calculation.
Note J2b : Calculation of Accrual in SGD
| Start date | 28-Feb-03 | |
| Month End Date | 28-Feb-03 | |
| Days (include 28-Feb) | 1 | =A |
| Start date | 28-Feb-03 | |
| Maturity Date | 3-Apr-03 | |
| Days (exclude 3-Apr) | 34 | =B |
| Total Interest | 4,772.30 | =C |
| Period Interest | 140.36 | =C*A/B |
Note J2d : The unrealised gain on the revaluation of the loan is analyzed as follows:
| SGD | Rate+ | USD |
|
| At Closing Rate* | 1,000,000.00 | 0.565691 | 565,690.85 |
| At Start Date | 1,000,000.00 | 0.568919 | 568,918.83 |
| Gain in exchange | 3,227.98 |
* In order for system to revalue the loan using Alternate Rate on the month end date, both SGD and USD month end rates must be maintained on the month end date. See Exchange Rates below. If no Alternate Rate available for both currencies on the month end date, system will revalue the loan using the accounting rate maintained for the month end date or last available rate.
+ Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
J3 Reversal Money Market Month End Accruals.
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 1-Mar-03 | P | MMK - Loan Interest Expense | SGD | -140.36 | 0.568919 | USD | -79.85 | J3a |
| MMK1001 | 1-Mar-03 | B | MMK - Loan Interest Payables | SGD | 140.36 | 0.568919 | USD | 79.85 | J3b |
| MMK1001 | 1-Mar-03 | B | MMK - Loan | SGD | 0.00 | USD | -3,227.98 | J3c | |
| MMK1001 | 1-Mar-03 | P | FX - Unrealised Gains-Capital | SGD | 0.00 | USD | 3,227.98 | J3d |
J4 Money Market Month End Accruals.
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 31-Mar-03 | P | MMK - Loan Interest Expense | SGD | 4,491.58 | 0.577434 | USD | 2,593.59 | J4a |
| MMK1001 | 31-Mar-03 | B | MMK - Loan Interest Payables | SGD | -4,491.58 | 0.577434 | USD | -2,593.59 | J4b |
| MMK1001 | 31-Mar-03 | B | MMK - Loan | SGD | 0.00 | USD | -4,837.56 | J4c | |
| MMK1001 | 31-Mar-03 | P | FX - Unrealised Losses-Capital | SGD | 0.00 | USD | 4,837.56 | J4d |
Note J4a : The spot rate on 31-Mar is 0.577434. See Exchange Rates below. The rate is rounded to 6dp for display. Full precision is used in calculation.
Note J4b : Calculation of Accrual in SGD
| Start date | 28-Feb-03 | |
| Month End Date | 31-Mar-03 | |
| Days (include 31-Mar) | 32 | =A |
| Start date | 28-Feb-03 | |
| Maturity Date | 3-Apr-03 | |
| Days (exclude 3-Apr) | 34 | =B |
| Total Interest | 4,772.30 | =C |
| Period Interest | 4,491.58 | =C*A/B |
Note J4d : The unrealised loss on the revaluation of the loan is analyzed as follows:
| SGD | Rate+ | USD |
|
| At Closing Rate* | 1,000,000.00 | 0.573756 | 573,756.38 |
| At Start Date | 1,000,000.00 | 0.568919 | 568,918.83 |
| Loss in exchange | -4,837.56 |
* In order for system to revalue the loan using Alternate Rate on the month end date, both SGD and USD month end rates must be maintained on the month end date. See Exchange Rates below. If no Alternate Rate available for both currencies on the month end date, system will revalue the loan using the accounting rate maintained for the month end date or last available rate.
+ Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
J5 Reversal Money Market Month End Accruals
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 1-Apr-03 | P | MMK - Loan Interest Expense | SGD | -4,491.58 | 0.577434 | USD | -2,593.59 | J5a |
| MMK1001 | 1-Apr-03 | B | MMK - Loan Interest Payables | SGD | 4,491.58 | 0.577434 | USD | 2,593.59 | J5b |
| MMK1001 | 1-Apr-03 | B | MMK - Loan | SGD | 0.00 | USD | 4,837.56 | J5c | |
| MMK1001 | 1-Apr-03 | P | FX - Unrealised Losses - Capital | SGD | 0.00 | USD | -4,837.56 | J5d |
J6 Money Market Loan Maturity.
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 3-Apr-03 | P | MMK - Loan Interest Expense | SGD | 4,772.30 | 0.581416 | USD | 2,774.69 | J6a |
| MMK1001 | 3-Apr-03 | B | MMK - Loan | SGD | 1,000,000.00 | 0.568919 | USD | 568,918.83 | J6b |
| MMK1001 | 3-Apr-03 | B | Cash at Bank | SGD | -1,004,772.30 | 0.581416 | USD | -584,190.32 | J6c |
| MMK1001 | 3-Apr-03 | P | FX - Realised Losses - Capital | SGD | 0.00 | USD | 12,496.80 | J6d |
Note J6a : The spot rate on 3-Apr is 0.581416. See Exchange Rates below. The rate is rounded to 6dp for display. Full precision is used in calculation.
Note J6d : The realised loss on the loan is analyzed as follows:
| SGD | Rate+ | USD |
|
| At Closing Rate | 1,000,000.00 | 0.581416 | 581,415.63 |
| At Start Date | 1,000,000.00 | 0.568919 | 568,918.83 |
| Loss in exchange | -12,496.80 |
+ Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
EXCHANGE RATES
Our illustration assumes the company uses different daily exchange rates for accounting.
The following rates were used for this illustration.
Spot Rate
Accounting Rate
| Date | USD/SGD | SGD/USD* |
|---|---|---|
| 28-Feb-03 | 1.757720 | 0.568919 |
| 31-Mar-03 | 1.731800 | 0.577434 |
| 3-Apr-03 | 1.719940 | 0.581416 |
Alternate Rate
| Date | USD/SGD | SGD/USD* |
|---|---|---|
| 28-Feb-03 | 1.767750 | 0.565691 |
| 31-Mar-03 | 1.742900 | 0.573756 |
| Date | SGD/SGD |
|---|---|
| 28-Feb-03 | 1.000000 |
| 31-Mar-03 | 1.000000 |
*Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
FREQUENTLY ASKED QUESTIONS
FAQ01: If a company is using the previous month’s month-end accounting rate (e.g., 31-Dec-2023) for transactions occurring in the current month (e.g., 1-Jan-2024 to 31-Jan-2024) and utilizes a different month-end rate for revaluing money market loan/deposit during month-end closing, how can the month-end accounting rate be updated to ensure accurate revaluation of Money Market Loan/Deposit and other financial instruments such as Foreign Exchange at month end?
To ensure accurate generation of revaluation for Money Market Loan/Deposit and other financial instruments such as Foreign Exchange at month end, please follow the steps outlined below. The example provided pertains to the month of January 2024.
Prerequisite: The accounting treatment for MM_Accrue (MM month-end closing journal) must be configured to use 11000103_5. This configuration setup is handled by CS Lucas team under Maintenance > ERP Events. If you are uncertain about the accounting treatment you are using, please contact CS Lucas for clarification.
11000103_5 – To record the accrual of interest in MM Deposits and Loans. P&L booked at SPOT rate. Monetary Asset Revaluation at Alt Rate on specific period date. Where Alt Rate is not available, latest Acct Rate will be used.
1. Begin by updating the month-end rate in the Alternate column initially. Do not update the month-end rate in the Accounting rate column yet; leave it blank.
2. Select all transaction journals and Recreate. Then, proceed to post. This step ensures that all transaction journals use the last available accounting rate, which corresponds to the previous month-end rate (accounting rate maintained on 31-Dec-2023).
3. Run month end processing. This action will generate month-end journals for MM and FX.
4. Select only money market month-end journals and Recreate. Then, post. This ensures there will be revaluation for MM loan/deposit, based on the last available accounting rate (the previous month-end rate maintained in the Accounting rate column for 31-Dec-2023), against the current month-end rate maintained under the Alternate rate column.
5. After the money market month-end journals are posted, update the Accounting rate column with the current month’s month-end rate (e.g., 31-Jan-2024).
6. Proceed to select the FX MTM journals and Recreate. These journals will revalue based on the current month’s month-end rates (now updated in the Accounting rate column in step 5). Then, post.
Important note: Please refrain from recreating any money market journals once this month’s month-end rate has been updated in the Accounting rate column.
7. Verify all entries in the accounting system to ensure accuracy before closing the period in the CS Lucas system.
RELATED INFORMATION
CHANGE HISTORY
| Date | By | Changes |
|---|---|---|
| 12-May-2020 | TS | Creation. |
| 12-May-2020 | LT | Re-formatting. |
| 21-Feb-2024 | TS | Added FAQ01. |
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