I have a situation in the system where some suppliers are payed using wire transfer and put into an account called Inventory in Transit. This is used to hold wires money transfers to suppliers before they actually arrive months down the road.
We use different currency to pay the wire transfer so the exchange variance will come into play.
The account payables is set up as Inventory in Transit instead of Accounts Payable.
So the normal process would be:
1) Payment to Supplier via Wire Transfer eg: $1000 made for Nov 11, 2008 (Inventory in Transit is debited, and bank is credited)
2) Inventory arrives, PO is received for Supplier Feb 03, 2009
3) Supplier Invoice is now then created for Feb 03, 2009
4) Payment made in the past is now allocated to this invoice
Here's the problem. The exchange variance created by allocation of the payment to the invoice adds to the payment GL created back in Nov 11, 2008 and not Feb 03, 2009. This poses a problem since Year end is already closed and accounted for at the end of Jan, 2009. Because of this invoice financial data is changed on the fly for Nov 11th.
Could the exchange variance be its own seperate GL post instead or have its own date when making the variance adjusments? Maybe it should a check to see if the invoice date is less than the payment date, if it is, do as normal and use the payment date, otherwise use the invoice date instead if invoice is created after payment..?