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Exchange differences
Understand the difference between realised and unrealised exchange gains or losses.
An exchange difference arises because the same foreign currency has a different accounting-currency value at different times. It is realised on settlement and unrealised while it comes only from remeasuring an open position.
Step by step
- 1For a payment or withdrawal, compare the transaction value with the carrying amount released from the position.
- 2Post the difference as a realised exchange gain or loss when the currency or open item is actually settled.
- 3Use remeasurement for the difference between carrying amount and closing-rate value of a position that remains open.
- 4Post charges such as bank fees separately; they are not exchange differences.
- 5Review exchange results in profit and loss and trace them to their underlying currency postings.
What is on the screen?
- Transaction value
- Carrying amount released
- Realised difference
- Unrealised difference
What happens next?
Exchange gains and losses are separate ledger lines and enter the period and fiscal-year result once. A later remeasurement or settlement starts from the then-current carrying amount.
Continue reading
Foreign-currency positions and remeasurement
Compare the carrying amount of an open monetary position with a closing rate on a selected date.
Read guidance →Posting in foreign currency
Post original currency amounts and their corresponding value in the accounting currency.
Read guidance →Profit and loss statement
Assess revenue, expenses and result over a selected period.
Read guidance →