The Unrealised gain or loss currency revaluation and its reversal will not be posted in the same period in NetSuite. When a currency revaluation entry is created automatically when running “Revalue open foreign currency balances” at the current month’s end, its reversal is created at the same time, but it is posted at the beginning of the next month.
The currency revaluation transactions are created to record the impacts of the foreign currency exchange rate fluctuations. Realized and unrealized gains or losses are recorded according to the transaction status and type of revaluation. The unrealized exchange rate gain/loss type revaluations have it’s reversals that are created at the same time but posting will be in different periods.
NetSuite is running the posting of Currency Revaluation and Reversal to measure and recognize any unrealized profit/loss at the end of the period based on the exchange rate at the date of the transaction. The Currency Revaluation adjusts the Balance sheet account to its proper valuation as of the period end. Any gains or losses will be recognized during the period using the exchange rate for the reporting period. If we do not reverse the Unrealized Gains or Losses in the next period, then there will be an understatement/overstatement of Profit and Loss. The reversal will allow us to measure the Valuation of the account based on the exchange rate at the date of the transaction.
As an example, we can use a simple scenario below:
Exchange rates in an original transaction and at the end of each period:
| Period | Exchange Rates |
| Transaction Date | 1.5 |
| 1 | 1.7 |
| 2 | 1.9 |
| 3 | 2.1 |
e.g. A transaction has Transaction Amount = 1,000.00 in Foreign Currency which was posted on Period 1. Here are the revaluation impact and the reversal:
| Period | Transaction | Amount in Base Currency | Running Balance Base Currency | Amount in Foreign Currency |
| Transaction Date | Original Transaction | 1,500.00 | 1,500.00 | 1,000.00 |
| End of Period 1 | Currency Reval 1 | 200.00 | 1,700.00 | 0.00 |
| Beginning of Period 2 | Reversal Currency Reval 1 | (200.00) | 1,500.00 | 0.00 |
| End of Period 2 | Currency Reval 2 | 400.00 | 1,900.00 | 0.00 |
| Beginning of Period 3 | Reversal Currency Reval 2 | (400.00) | 1,500.00 | 0.00 |
| End of Period 3 | Currency Reval 3 | 600.00 | 2,100.00 | 0.00 |
Calculate the currency revaluation by using the formula = (Exchange rate at the date of the transaction – Exchange Rate at the end of Period)*Foreign currency value.
Unrealized Gain or Loss that was recognized for each period:
Period 1 = 200.00
Period 2 = 400.00
Period 3 = 600.00
Period 1 to 3 = 600
If no Reversal on the next period is done, there will be an overstatement of the P/L and Balance Sheet:
| Period | Transaction | Amount in Base Currency | Running Balance Base Currency | Amount in Foreign Currency |
| Transaction Date | Original Transaction | 1,500.00 | 1,500.00 | 1,000.00 |
| End of Period 1 | Currency Reval 1 | 200.00 | 1,700.00 | 0.00 |
| End of Period 2 | Currency Reval 2 | 400.00 | 2,100.00 | 0.00 |
| End of Period 3 | Currency Reval 3 | 600.00 | 2,700.00 | 0.00 |
Unrealized Gain or Loss that was recognized for each period:
Period 1 = 200.00
Period 2 = 400.00
Period 3 = 600.00
Period 1 to 3 = 1,200