Currency revaluation transactions are created to record the impacts on the foreign currency exchange rate fluctuations. Realized and unrealized gains or losses are recorded according to the transaction status and type of revaluation:
- Realized gain/loss – All Accounts Payable and Accounts Receivable transactions which have payments made, and have their foreign currency variance is posted to Realized gain/loss account.
- Unrealized gain/loss – For all Accounts Payable and Accounts Receivable transactions which are open, and have their foreign currency revaluation as per the current rate will be posted to the unrealized gain/loss account, and also the reversal will be posted to the same account to remove the duplication of the amount. The other accounts which have open foreign currency balances will also be posted to the unrealized gain/loss account.
- Base currency adjustment – If the transaction currency balance for an account is 0 but the base currency balance is not 0, then the revaluation process will create the base currency adjustment currency revaluation record.
- Rounding gain/ Loss – The rounding difference due to the foreign exchange rate variance between source transaction and payment transaction, will be created as currency revaluation rounding gain/loss record.