Valuation and Rediscount

According to the Tax Procedure Law, it is obligatory to carry out exchange rate valuation at the end of each provisional tax period. In foreign currency transactions, if there are exchange rates between the transaction date and the payment or collection date, there will be a foreign exchange difference. This exchange difference should be reflected in the income or expense accounts. If the transactions made during the valuation process are closed within the same period, the entire exchange rate difference is accrued within that period. However, if the transaction and the closing period are different, the exchange rate difference in each period should be accrued in the relevant period.

Let's explain the subject with an example;

Let's say we made a sale of 10,000 USD on April 12, 2016. On this date, 1 USD = 2.80 TL. The maturity of the invoice in question is 15 days and when 10,000 USD is paid at the end of the maturity, the exchange rate difference will occur as the exchange rate is 1 USD = 3 TL. 2.000 TL is foreign exchange income and this is reflected in the foreign exchange profits accounting account. The accounting movements of the transactions will be as follows.

According to the Tax Procedure Law, banks and insurance companies are required to be subject to rediscount. There is no obligation for other businesses. The process of converting the written value on the receivables and payables, which are not yet due as of the end of the period, to the real value is called rediscount. The rediscount rate can be determined on the promissory note. If this rate is not specified, the Central Bank rediscount rate valid on the valuation day will be valid.

How is the rediscount amount calculated?

Rediscount Amount = [Nominal Value * Interest Rate * Number of Days] / [36,000 + (Interest Rate * Number of Days)]

If we explain the subject with an example;

As of 31 December 2016, we have a receivable note with a nominal value of TL 50,000 and an interest rate of 20% with a maturity of 11 March 2017 in our portfolio. The transactions to be made at the end of 2016 period are as follows.

Rediscount Amount = [50,000 * 20 * 70] / [36,000 + (20 * 70)]

                                    = 1,871.65 TL

Tip

In W3 rediscount transactions; Credit is entered in the accounting code entered in the rediscount accounting code field in the receivable note or check. In debit notes or checks, the related account will be debited.

Important

If the rediscount amount calculated at the end of the period is an expense, it should be reflected to the relevant account as income at the beginning of the period, and the income should be reflected in the relevant account as an expense at the beginning of the period. Rediscount transactions should be made on all receivables and all debt securities.