Scenario
When an account has been zeroed out or closed in the subsidiary’s base currency—but contains transactions in a different currency—month-end currency revaluation may still post unrealized gain or loss amounts. NetSuite Support has reviewed this behavior and confirmed that it is expected system functionality.
This situation occurs because, although the account’s displayed net balance in the subsidiary’s base currency is zero, the user did not fully apply the equivalent foreign currency amounts to clear the associated non-base currency transactions. As a result, NetSuite identifies remaining foreign currency balances as open and includes them in the currency revaluation process.
Example
Consider an account with the following open balances:
- $50 USD
- €50 EUR
The subsidiary’s base currency is USD. When exchange rates are applied, the total open balance is approximately $95 USD. If the user posts a $95 USD debit to offset the account, the base-currency balance becomes zero. However, NetSuite cannot assume that the $95 USD was intended to close both the USD and EUR transactions.
NetSuite will apply the $95 debit only to the USD transaction, leaving the €50 balance open. Because this foreign currency balance remains unapplied, it will be included in month-end currency revaluation, generating unrealized gain or loss.
Solution
There are two recommended approaches to resolve or prevent these unexpected revaluation entries:
1. Manually Reverse Incorrect Revaluation Entries
Users may create journal entries to reverse unrealized gain or loss amounts posted in error during the currency revaluation process.
2. Apply Transactions in Their Original Currencies
Instead of applying a single base-currency amount (e.g., $95 USD) to clear the entire balance, users should apply amounts directly to each transaction in its native currency.
Using the example above:
- Apply a USD journal entry to close the $50 USD transaction.
- Apply a EUR journal entry to close the €50 EUR transaction.
This approach ensures that each transaction is fully closed in its respective currency, leaving no open foreign currency balances and preventing unwanted unrealized gain or loss during revaluation.