Discussion forum_Unit2

Exchange gain or loss arises from changes in exchange rates with changes in dates where the fluctuations in exchange rates affect a constant amount of money. Take the instance of goods being sold on credit at a particular date and valued at a given price relevant to the exchange rates at that same date. If, at a later date, the debtors settle their obligations in respect of the goods that had passed to them at the previously agreed price, changes in exchange rates with changes in dates consequently result in exchange gain or loss on the amount settled.