{"id":57134,"date":"2015-09-15T22:20:07","date_gmt":"2015-09-15T15:20:07","guid":{"rendered":"https:\/\/bahtera.jp\/base-currency\/"},"modified":"2026-09-12T15:24:54","modified_gmt":"2026-09-12T08:24:54","slug":"base-currency","status":"publish","type":"post","link":"https:\/\/bahtera.jp\/en\/base-currency\/","title":{"rendered":"Implementation and Challenges of Multi-Currency Accounting Systems in Indonesia"},"content":{"rendered":"<p>When re-evaluating foreign exchange at the end of the month for receivables and payables, if the gain or loss compared to the previous month is significant, the separation method is used to update the invoice price to the latest evaluation value. If the gain or loss compared to the acquisition time is important, the reversal method is used to revert to the acquisition evaluation value at the beginning of the next month.<\/p>\n\t\t\t\t<a href=\"https:\/\/bahtera.jp\/en\/accounting-system-indonesia\/\" class=\"st-cardlink\" aria-label=\"Accounting Systems in Indonesia\">\r\n\t\t\t\t<div class=\"kanren st-cardbox\" >\r\n\t\t\t\t\t\t\t\t\t\t<dl class=\"clearfix\">\r\n\t\t\t\t\t\t<dt class=\"st-card-img\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-150x150.png\" class=\"attachment-st_thumb150 size-st_thumb150 wp-post-image\" alt=\"Infographic structuring accounting systems in Indonesia, highlighting SaaS services, adoption rates, and automation trends\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-150x150.png 150w, https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-100x100.png 100w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dt>\r\n\t\t\t\t\t\t<dd>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"st-cardbox-t\">Accounting Systems in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"st-card-excerpt smanone\">\r\n\t\t\t\t\t\t\t\t\t<p>The adoption rate of SaaS-based accounting systems in Indonesia is less than 8%, despite the advancement of SaaS technology. The continuous launch of new\u2026<\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"cardbox-more\">\u7d9a\u304d\u3092\u898b\u308b<\/p>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dd>\r\n\t\t\t\t\t<\/dl>\r\n\t\t\t\t<\/div>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t\n<div class=\"article-point\" id=\"key-takeaways\">\n<h2 class=\"article-point-title\">What this article covers<\/h2>\n<ul>\n<li>Since July 2015, it is mandatory to conduct domestic transactions in Indonesia based on rupiah.<\/li>\n<li>If dollar-based reporting is approved by the tax office, it must be continued for five years.<\/li>\n<li>Foreign currency transactions require three currency conversions: from foreign currency to functional currency, and from functional currency to presentation currency.<\/li>\n<li>Indonesian accounting systems need to comply with IFRS, and having a multi-standard ledger function is ideal.<\/li>\n<li>There are separation and reversal methods for foreign exchange revaluation, with different ways of recording evaluation gains and losses.<\/li>\n<\/ul>\n<\/div>\n<p><script type=\"application\/ld+json\" id=\"wprestapi-ai-jsonld\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"BlogPosting\",\"@id\":\"https:\/\/bahtera.jp\/en\/base-currency\/#article\",\"headline\":\"Implementation and Challenges of Multi-Currency Accounting Systems in Indonesia\",\"description\":\"Since July 2015, it is mandatory to conduct domestic transactions in Indonesia based on rupiah. If dollar-based reporting is approved by the tax\u2026\",\"mainEntityOfPage\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/bahtera.jp\/en\/base-currency\/\"},\"inLanguage\":\"en\",\"datePublished\":\"2015-09-15T22:20:07\",\"dateModified\":\"2025-03-20T13:20:37\",\"author\":{\"@type\":\"Person\",\"name\":\"yamazou\"}},{\"@type\":\"ItemList\",\"@id\":\"https:\/\/bahtera.jp\/en\/base-currency\/#key-takeaways\",\"name\":\"What this article covers\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Since July 2015, it is mandatory to conduct domestic transactions in Indonesia based on rupiah.\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"If dollar-based reporting is approved by the tax office, it must be continued for five years.\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Foreign currency transactions require three currency conversions: from foreign currency to functional currency, and from functional currency to presentation currency.\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Indonesian accounting systems need to comply with IFRS, and having a multi-standard ledger function is ideal.\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"There are separation and reversal methods for foreign exchange revaluation, with different ways of recording evaluation gains and losses.\"}]}]}<\/script><\/p>\n<h2>Differences Between Accounting and Taxation<\/h2>\n<p>Since July 2015, it has been mandated by Bank Indonesia (BI) that domestic transactions in Indonesia be conducted in rupiah. However, according to an accountant in Bandung, it is possible to conduct transactions in dollars with specific partners if permission is obtained from BI. This requires visiting BI in Jakarta.<\/p>\n<p>However, this is a gray area, and the basic policy of BI remains unchanged, with restrictions based on the size and volume of transactions of the applying company or partner.<\/p>\n<p>On the other hand, in terms of taxation, if dollar-based reporting is approved by the Indonesian tax office (Kantor Pajak), it must be continued for five years. For example, a company that started accounting in January 2011 is required to report in dollars until the end of December 2016.<\/p>\n<p>Thus, there is a discrepancy between the BI-led shift to rupiah-based accounting and the tax office policy, causing issues where financial statements and tax reports need to remain dollar-based for a year even if the accounting system is changed to rupiah-based from January 2016.<\/p>\n<p>The base currency in accounting is the functional currency, while the reporting currency for the tax office is the presentation currency.<\/p>\n\t\t\t\t<a href=\"https:\/\/bahtera.jp\/en\/base-currency\/\" class=\"st-cardlink\" aria-label=\"Implementation and Challenges of Multi-Currency Accounting Systems in Indonesia\">\r\n\t\t\t\t<div class=\"kanren st-cardbox\" >\r\n\t\t\t\t\t\t\t\t\t\t<dl class=\"clearfix\">\r\n\t\t\t\t\t\t<dt class=\"st-card-img\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2015\/09\/indonesia-3-150x150.png\" class=\"attachment-st_thumb150 size-st_thumb150 wp-post-image\" alt=\"Infographic structuring multi-currency accounting flow and regulations in Indonesia\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2015\/09\/indonesia-3-150x150.png 150w, https:\/\/bahtera.jp\/wp-content\/uploads\/2015\/09\/indonesia-3-100x100.png 100w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dt>\r\n\t\t\t\t\t\t<dd>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"st-cardbox-t\">Implementation and Challenges of Multi-Currency Accounting Systems in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"st-card-excerpt smanone\">\r\n\t\t\t\t\t\t\t\t\t<p>The implementation of multi-currency accounting systems in Indonesia faces challenges due to mandatory rupiah-based transactions and the need for IFRS\u2026<\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"cardbox-more\">\u7d9a\u304d\u3092\u898b\u308b<\/p>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dd>\r\n\t\t\t\t\t<\/dl>\r\n\t\t\t\t<\/div>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t\n<h2>Foreign Exchange Differences in Foreign Currency Transactions<\/h2>\n<p>To fulfill the one-year reporting obligation to the tax office, conversion to the presentation currency base is necessary. This results in a three-step foreign exchange conversion flow in accounting: &#8220;foreign currency to functional currency to presentation currency.&#8221;<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>From foreign currency to functional currency (no difference arises using transaction rate)<\/li>\n<li>Exchange gain or loss at settlement of receivables\/payables (difference arises between transaction rate and settlement date rate)<\/li>\n<li>Foreign exchange revaluation (difference arises from month-end rate conversion of asset\/liability items)<\/li>\n<li>From functional currency to presentation currency (difference arises from month-end rate conversion of asset\/liability items)<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>The foreign exchange gain or loss from revaluation of liabilities A\/P at the month-end rate is called unrealized profit (Forex Gain-Unrealized) because it is a potential profit at a certain point in time. On the other hand, the exchange gain or loss at settlement of liabilities A\/P is distinguished as realized profit (Forex Gain-Realized).<\/p>\n<p>It is necessary to clarify which invoice or journal entry the confirmed exchange gain or loss arises from by settlement or conversion (dollar conversion if dollar-based).<\/p>\n<p>However, if the previous month&#8217;s end rate is used as a flat rate for transaction rates, the rate at A\/P settlement is already the previous month&#8217;s end rate, so no realized profit arises.<\/p>\n<h2>Timing of Conversion to Presentation Currency Base<\/h2>\n<p>The purpose of converting financial statements from the functional currency rupiah base to the presentation currency dollar base is for tax reporting and preparation of consolidated financial statements. In systems that can handle multiple functional currencies, journal entries are generated in multiple functional currency bases each time a transaction is entered, but conversion to the presentation currency is done by batch processing at the end of the month (or fiscal period).<\/p>\n<p>The conversion rate used can be the transaction rate (historical rate), the end-of-period rate (Last rate), or the average rate (Average rate).<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Multiple functional currency system (transaction rate)\n<ul>\n<li>Transaction currency (Yen)<\/li>\n<li>Functional currency (Rupiah)<\/li>\n<li>Functional currency (Dollar)<\/li>\n<\/ul>\n<\/li>\n<li>Conversion to presentation currency in a single functional currency system (end-of-period rate)\n<ul>\n<li>Transaction currency (Yen) &#8211; Functional currency (Rupiah) &#8211; Presentation currency (Dollar)<\/li>\n<\/ul>\n<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>If the conversion rate is the transaction rate, conversion is done at the journal level, but the exchange gain or loss at settlement and month-end revaluation are results of correcting the impact of yen exchange fluctuations on rupiah, and are meaningless journal entries against the presentation currency dollar. Accurate conversion to the presentation currency by month-end batch processing is very difficult, which is the difference from systems supporting multiple functional currencies.<\/p>\n<h2>Key Points for Implementing Accounting Systems in Indonesia<\/h2>\n<h3>Compliance with International Financial Reporting Standards (IFRS)<\/h3>\n<p>Accounting systems used by Japanese companies in Indonesia are broadly categorized into low-cost local vendor products, mid-range foreign products (American, Japanese, European), and high-cost systems like SAP (Germany).<\/p>\n<p>When implementing accounting systems in Indonesia, compliance with International Financial Reporting Standards (IFRS) is required. It is recommended to be aware of IFRS compliance relatively early in Indonesia, and awareness of IFRS, such as revenue and expense recognition standards, fair value evaluation, and fixed asset depreciation methods, is considered higher than in Japan.<\/p>\n<p>IFRS aims to provide necessary information for investors and creditors to evaluate corporate value. Therefore, by accurately preparing the balance sheet B\/S through fair value evaluation of fixed asset impairment, revaluation, and available-for-sale financial assets, it clarifies whether the company is in a position to generate profits commensurate with investment.<\/p>\n<p>While financial reporting based on IFRS is required for consolidated financial statements of the Japanese headquarters, the Indonesian side may not necessarily comply with this, so tax reports need to be prepared based on independent standards. Therefore, it is ideal for accounting systems to implement multiple standard ledger functions, allowing transfers for Japanese headquarters and Indonesian financial statements at the journal entry level.<\/p>\n<h3>Exchange Rates<\/h3>\n<p>When implementing accounting systems in Indonesia, an important tax system is the Value Added Tax (VAT), called PPN (Pajak Pertambahan Nilai) in Indonesia.<\/p>\n<p>Companies need to use the Tax Rate published weekly by the tax office (Kantor Pajak) for calculating taxes related to foreign currency transactions, so accounting systems need to have both transaction rates and Tax rates. The system&#8217;s exchange rate master should set the Tax Rate in addition to the transaction rate for each currency, and refer to the applicable rate during transaction entry.<\/p>\n<p>The exchange rate applied to foreign currency transactions can either be the previous day&#8217;s rate applied daily (Spot Rate) or the previous month&#8217;s end rate fixed as the applicable rate for the current month (Flat Rate). In the former case, a mechanism to automatically generate journal entries for exchange gain or loss at settlement of receivables\/payables is necessary.<\/p>\n<p>At the end of the month, the system performs foreign exchange revaluation (Revaluation) at the month-end rate for receivables\/payables and cash deposits carried over to the next month.<\/p>\n<h3>Faktur Pajak (Tax Invoice) Issuance Function<\/h3>\n<p>Indonesia adopts an invoice method instead of a bookkeeping method, calculating tax amounts based on Faktur Pajak (Tax Invoice). Faktur Pajak must be attached to invoices during tax payment and refund claims, but the form changes irregularly, requiring format adjustments in the system each time.<\/p>\n<p>Based on Faktur Pajak, the amount of PPN payment or refund is calculated, offsetting PPN imposed on sales (Output) and PPN imposed on purchases (Input). If sales PPN is higher, tax is paid; if purchase PPN is higher, a refund can be claimed.<\/p>\n<p>Incidentally, since 2019, Faktur Pajak has been output from the desktop application E-Faktur system, and from 2025, it will be output from the online coretax system, so layout adjustments on the accounting system are no longer necessary.<\/p>\n<h2>Features of Multi-Currency Accounting Systems<\/h2>\n<p>Corporate transactions are recorded in the transaction currency (Original currency) in accounting, but when posted to the general ledger (G\/L), they are converted to the functional currency (Base currency), and both transaction and functional currency amounts are maintained on the ledger.<\/p>\n<p>In Indonesia, only two types of functional currencies, rupiah or dollar, are recognized, and transaction entries are made in the transaction currency, converting to the functional currency when posted to the ledger. The profit and loss statement (P\/L) and B\/S (balance sheet) are prepared in the functional currency, and reports to the tax office are also reported in the functional currency (only rupiah or dollar).<\/p>\n<p>Even in multi-currency transactions, taxes must be paid in the national currency, rupiah. The tax payment amount arising from foreign currency transactions is converted to rupiah using the Tax rate published by the tax office (Kantor Pajak) every Wednesday. If the system supports multi-currency accounting, the following functions are necessary.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Input in transaction currency and maintain both transaction and functional currency amounts on the ledger<\/li>\n<li>Automatically generate journal entries for exchange gain or loss at settlement (realized gain or loss is not generated if the previous month&#8217;s end rate is used as the transaction rate).<\/li>\n<li>Have a function for foreign exchange revaluation (unrealized gain or loss) at month-end.<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>If it is necessary to submit two financial statements, rupiah and yen, to the Japanese headquarters, in a system with rupiah as the functional currency, it is necessary to generate journal entries that treat non-yen currencies as foreign currencies for each transaction entry. To prepare trial balances (Trial Balance = T\/B) in rupiah and dollar, separate ledgers are required, but there are few commercially available packages that support multiple functional currencies.<\/p>\n<p>As the need for IFRS compliance increases, the demand for multiple functional currencies is also expected to rise. When creating offsetting journal entries to correct foreign currency transaction journal entries, if the transaction rate is not entered, even if the balance is zero in the transaction currency base, a balance will remain in the functional currency base, so caution is needed.<\/p>\n<p>When changing the functional currency (from dollar to rupiah), it is necessary to delete all realized and unrealized foreign exchange gain or loss journal entries from past receivables\/payables transactions, revert to the acquisition evaluation value, offset at the settlement exchange rate, and record realized foreign exchange gain or loss against the new functional currency (rupiah).<\/p>\n<p>Since July 2015, Bank Indonesia has mandated that domestic cash and non-cash transactions be conducted in the national currency (rupiah) to stabilize exchange rates.<\/p>\n<h2>Processing Exchange Gain or Loss at Purchase and Settlement<\/h2>\n<p>If a company with rupiah as the functional currency makes a purchase of 100 yen (A\/P arises) and the yen appreciates at settlement (1 yen = Rp.100) compared to the rate at occurrence (1 yen = Rp.98), the journal entry is as follows.<\/p>\n<div class=\"graybox\">\n<p>Upon invoice arrival (A\/P arises) 1 yen = Rp.98<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Purchase \uffe5100 (Credit) A\/P \uffe5100 (\uffe5100 x 98 = Rp.9,800)<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"graybox\">\n<p>At settlement 1 yen=Rp.100 Yen appreciation, Rupiah depreciation<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) A\/P \uffe5100 (Credit) Bank JPY \uffe5100 (\uffe5100 x 98 = Rp.9,800) (\uffe5100 x 100 = Rp.10,000)<\/li>\n<li>(Debit) Forex loss Rp. 200<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>To offset A\/P in both transaction and functional currencies, evaluation at the purchase rate is applied at settlement. In this case, the increase from \uffe5100 at A\/P occurrence (\uffe5100 x Rp98 = Rp.9800) to \uffe5100 at settlement (\uffe5100 x Rp100 = Rp.10,000) is recorded as an exchange loss of Rp.200.<\/p>\n<p>In accounting systems where separate currency accounts can be set in the ledger, it does not balance in the transaction currency base, but it must always balance in the functional currency base. If only the ledger of the accounting system is introduced, the system automatically refers to the daily rate in the exchange rate master at settlement journal entry.<\/p>\n<p>To apply the rate at A\/P occurrence for offsetting liabilities and generate journal entries for exchange gain or loss based on the settlement rate, a function to manually adjust the rate at A\/P occurrence in the debit item of the journal entry screen is necessary.<\/p>\n<h2>Processing Exchange Gain or Loss at Sales and Receipt<\/h2>\n<p>Exchange gain or loss at sales and receipt is recorded with the awareness of always balancing in the functional currency. Specifically, the increase from $1,000 at A\/R (Account Receivable) occurrence ($1,000 x Rp9,000 = Rp.9,000,000) to $1,000 at receipt ($1,000 x Rp9,200 = Rp.9,200,000) is recorded as an exchange gain of Rp.200,000.<\/p>\n<div class=\"graybox\">\n<p>Upon invoice issuance (A\/R arises) $1 = Rp.9,000<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) A\/R $1,000 (Credit) Sales $1,000<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"graybox\">\n<p>At settlement $1=Rp.9,200 Dollar appreciation, Rupiah depreciation<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Bank $1,000 (Credit) A\/R $1,000 ($1,000 x 9200 = Rp.9,200,000) ($1,000 x 9000 = Rp.9,000,000)<\/li>\n<li>(Credit) Forex Gain Rp.200,000<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Revaluation of A\/R, A\/P Just Before Month-End Closing<\/h2>\n<p>When carrying over the month-end balance of A\/P and A\/R to the next month, it is necessary to re-evaluate at the month-end rate. If the rate during the month is fixed at the previous month&#8217;s end rate, the balance of A\/R and A\/P can be collectively re-evaluated. However, if the rate differs for each transaction date, foreign exchange evaluation conversion based on the transaction occurrence rate is necessary.<\/p>\n<p>When recording exchange gain or loss from foreign exchange revaluation as the difference from the evaluation value at the beginning of the year, just before the month-end closing, the B\/S assets with transaction currency are re-evaluated at the month-end rate and offset (Re-class) at the beginning of the next month.<\/p>\n<div class=\"graybox\">\n<p><strong>Case:<\/strong> Upon invoice arrival (A\/P arises) 1 yen = Rp.98<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) A\/P Accrued \uffe5100 (Credit) A\/P (Accounts Payable) \uffe5100<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>The \uffe5100 at A\/P occurrence (\uffe5100 x Rp98 = Rp.9800) corresponds to \uffe5103.2 at the beginning of the next month (\uffe5103.2 x Rp95 = Rp.9800), so the difference when compared in the functional currency is processed in the transaction currency.<\/p>\n<div class=\"graybox\">\n<p><strong>Case:<\/strong> Exchange difference adjustment after month-end closing 1 yen = Rp.95 Yen depreciation, Rupiah appreciation<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Forex Loss \uffe53.2 (Credit) A\/P \uffe53.2<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Process of Changing Functional Currency from Dollar to Rupiah<\/h2>\n<p>Since July 2015, it has been mandated that domestic transactions be conducted in rupiah. As a result, accounting processing has become centered on rupiah, and there is a movement among Japanese manufacturers to change the functional currency of accounting systems from dollars to rupiah. In 2015, besides the issue of functional currency, there were many changes in business practices, such as the complete online implementation of VAT declaration through Tax Invoice (Faktur Pajak) e-Faktur and the recommendation to prepare contracts related to domestic commercial transactions in Indonesian.<\/p>\n<p>Changing the functional currency requires cutting off at the beginning of the fiscal year and changing the system&#8217;s basic parameters from dollars to rupiah.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Preparation of rupiah-based system environment and DB<\/li>\n<li>Migration of masters<\/li>\n<li>Investigation of impact on existing reports and vouchers<\/li>\n<li>Preparation of opening balances in rupiah (A\/P and A\/R are required per invoice for settlement)<\/li>\n<li>First closing process in rupiah<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>The above is the flow of work, but the important thing is to match the opening balances of the A\/R account and A\/P account with the opening balances on the trial balance (Trial Balance) in rupiah. If it involves processing with adjustments to A\/R and A\/P, such as Debit Note or Credit Note, it is fine, but if it involves processing that only impacts the G\/L, such as exchange difference adjustment or tax adjustment, the balance between the two will not match.<\/p>\n<h2>Foreign Currency Evaluation Conversion<\/h2>\n<p>Foreign currency evaluation conversion (Revaluation) applies to receivables A\/R and payables A\/P, as well as other current assets and liabilities. When the functional currency is changed, the currencies subject to foreign currency evaluation conversion, dollar and rupiah, are swapped. Cross-currencies with the dollar from the perspective of rupiah, such as yen, Singapore dollar, and Thai baht, are subject to conversion, but the standard for conversion is rupiah.<\/p>\n<p>In accounting, it is common to use the middle rate (TTM) of the central bank (Bank Indonesia) as the transaction rate. It is also possible to use the TTM of Tokyo Mitsubishi (BOTM), but using the BI rate is safer. It is also possible to use TTS (bank&#8217;s selling rate) for purchases and TTB (bank&#8217;s buying rate) for sales, but it is problematic for management if the same day&#8217;s sale and purchase are the same amount in foreign currency but different in functional currency.<\/p>\n<p>Some companies use the previous month&#8217;s end rate as the flat rate for transactions in the current month. In this case, no realized foreign exchange gain or loss occurs at settlement, but unrealized foreign exchange loss may occur at month-end foreign currency evaluation conversion. In this case, the transaction rate in the exchange rate master is set with the previous month&#8217;s end rate even on the last day of the current month, so it is necessary to set a rate for Revaluation in addition to the transaction rate and TAX rate.<\/p>\n<h2>Separation Method and Reversal Method<\/h2>\n<p>There are two methods for foreign currency evaluation conversion: the separation method, which separates the acquisition cost, and the reversal method, which maintains the acquisition cost. In the separation method, the evaluation gain or loss from the comparison with the previous month&#8217;s end on the P\/L increases or decreases as the evaluation amount on the B\/S at the end of each month. In the reversal method, a reversal journal entry is generated at the beginning of the next month for the foreign exchange revaluation journal entry at the end of the current month, resetting it, so the evaluation gain or loss from the comparison with the acquisition date on the P\/L increases or decreases as the evaluation amount on the B\/S at the end of each month.<\/p>\n<div class=\"graybox\">\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case:<\/strong> In the separation method, the difference between the previous month&#8217;s end rate and the current month&#8217;s end rate is considered.<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Unrealized Forex loss 30 (Credit) A\/R 30<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"graybox\">\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case:<\/strong> In the reversal method, the difference between the acquisition date rate and the current month&#8217;s end rate is considered.<\/p>\n<div class=\"maruck\">\n<ul>\n<li>Month-end (Debit) Unrealized Forex loss 35 (Credit) A\/R 35<\/li>\n<li>Reversal at the beginning of the next month (Debit) A\/R 35 (Credit) Unrealized Forex loss 35<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Frequently Asked Questions | Multi-Currency Accounting Systems in Indonesia<\/h2>\n<p>Based on the content of this article, frequently asked questions are briefly organized.<\/p>\n<h3>What are the important points when implementing accounting systems in Indonesia?<\/h3>\n<p>When implementing accounting systems in Indonesia, compliance with International Financial Reporting Standards (IFRS) is necessary. Particularly, revenue and expense recognition standards, fair value evaluation, and fixed asset depreciation methods are emphasized. Additionally, the reporting currency for the tax office must be either rupiah or dollar.<\/p>\n<h3>How is exchange gain or loss processed in foreign currency transactions in Indonesia?<\/h3>\n<p>Exchange gain or loss in foreign currency transactions arises at the settlement of receivables\/payables and at month-end foreign exchange revaluation. At settlement, it is recorded as realized profit, and at month-end revaluation, it is recorded as unrealized profit. It is required to maintain balance in the functional currency base using transaction rates and month-end rates.<\/p>\n<h3>What are the features of multi-currency support in accounting systems in Indonesia?<\/h3>\n<p>In Indonesian accounting systems, transactions are recorded in the transaction currency and converted to the functional currency when posted to the ledger. Only rupiah or dollar is recognized as the functional currency, and taxes must be paid in rupiah. The system is required to maintain both transaction and functional currency amounts and automatically generate exchange gain or loss.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The implementation of multi-currency accounting systems in Indonesia faces challenges due to mandatory rupiah-based transactions and the need for IFRS\u2026<\/p>\n","protected":false},"author":2,"featured_media":104680,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[683],"tags":[],"class_list":["post-57134","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-indonesia-accounting-tax-rule"],"_links":{"self":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/comments?post=57134"}],"version-history":[{"count":1,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57134\/revisions"}],"predecessor-version":[{"id":103889,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57134\/revisions\/103889"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media\/104680"}],"wp:attachment":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media?parent=57134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/categories?post=57134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/tags?post=57134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}