Most of the time, the exchange rates fluctuate within your fiscal year and this lead to Realized and Unrealized Gains and Losses from foreign exchange transactions.
For example, let’s take a look at the second row of a screenshot above of Industry Supply Unrealized Gains and Losses report – A/R of EUR. The foreign balance is EUR 1,006,-. Assuming the exchange rate of EUR/CAD of 1.00 at the transaction and 1.31 at the reporting date, Industry Supply has an unrealized loss of CAD 311.86 (1,006 x 0.31). The same applies for other currencies in the report.
The Unrealized Gains & Losses are the potential gains and losses based on the latest exchange rates, while the Realized Gains & Losses are what you have already gained or lost on foreign currency transactions. This is why in the sample above, only A/R and A/P show since both are still pending transactions.
To see the Realized Gains & Losses on foreign currency transactions:
Go to Reports > Company & Financials > Realized Gains & Losses.
To see potential gains & losses on foreign currency transactions:
- Go to Reports > Company & Financials > Unrealized Gains & Losses.
- Then input the correct date and current exchange rates in the Enter Exchange Rates window as shown below. Click Continue.
Home Currency Adjustment (Currency Revaluation) is based on this Realized Gains & Losses report.