Exchange Rate for Reporting

[benito]

Hi,

I am a bit confuse regarding the foreign exchange rate on reporting.

I wonder if a Hong Kong company which has its functional currency and presentation currency in HKD, while the presentation currency of the holding company is in GBP, will need to adjust all individual invoice in foreign currencies for each reporting period in its books.

Assuming below sales invoices are outstanding as of 31 March 2025 :

1. Invoice 00001 which was billed to Customer ABC on 26 Feb 2025. The invoice amount is USD 1,000. FX was HKD 1.00 = USD 0.12862 on 26 Feb 2025. Thus, it was recorded as HKD 7,775 under AR on the transaction date.
2. Invoice 00002 which was billed to Customer DEF on 10 Mar 2025. The invoice amount is EUR 2,000. FX was HKD 1.00 = EUR 0.11873 on 10 Mar 2025. Thus, it was recorded as HKD 16,845 under AR on the transaction date.
3. Invoice 00003 was was billed to the holding company MOTHER on 11 Mar 2025. The invoice amount is GBP 1,000. FX was HKD 1.00 = GBP 0.09974 on 11 Mar 2025. Thus, it was recorded as HKD 10,026 under AR on the transaction date.

Assuming the FX as of 31 March 2025 was:

• HKD 1.00 = USD 0.12855
• HKD 1.00 = EUR 0.11869
• HKD 1.00 = GBP 0.09932

As of 31 Mar 2025, on HK company account, are we required to adjust the AR balance showing under the HK books for all non-intragroup invoices by restating to:

1. HKD 7,779 (i.e. USD 1000/0.12855) as the AR balance for Invoice 00001
2. HKD 16,851 (i.e. EUR 2000/0.11869) as the AR balance for Invoice 00002

As of 31 Mar 2025, for exchange rate conversion for consolidation purpose, I presume the total AR balance (non-intragroup) shown on HK company books is GBP 2,446 (i.e. [7779+16851] x 0.09932), correct?

As of 31 Mar 2025, on HK company account, are we required to adjust the AR balance showing under the HK books for all intragroup invoices by restating to HKD 10,068 (i.e. GBP 1000/0.09932) for Invoice 00003, or are we required to leave the balance to HKD 10,026 (i.e. as per transaction date) because we will use the historical rate for individual intracompany invoice during consolidation?

Thank you.