About unrealized and realized gain and loss accounts

When open transactions exist at the end of a period, the ending exchange or translation rate is used to compute the company's current exposure.

• If a negative (credit) variance exists between the beginning exchange or translation value of a transaction and the ending exchange or translation value of that transaction, then the variance amount is posted to the Unrealized Loss account.

• If a positive (debit) variance exists between the beginning exchange or translation value of a transaction and the ending exchange or translation value of that transaction, then the variance amount is posted to the Unrealized Gain account. These entries are reversed in the next period, and the process is repeated until the transactions are closed.

  Note: Accounts Payable and Accounts Receivable reverse the unrealized gain or loss entries automatically the next time they perform an operation affecting the transaction. For transactions revalued in General Ledger, you must enter reversing journal entries manually.

  The General Ledger application does not post any entries to the realized gain or loss accounts. Accounts Payable and Accounts Receivable are the only applications using these accounts.

After the transactions are closed, the Accounts Payable or Accounts Receivable application calculates the actual gain or loss and posts it to the realized gain or loss account.