Foreign Currency Revaluation for Unrealized Gain & Loss

Overview:

When your company issues invoices or receives bills in foreign currency, but the payment has not yet been made by the end of the month, the account will proceed for revaluation, it helps to identify unrealized foreign exchange gains or losses, which occur due to exchange rate movements before actual settlement. These are recorded in the profit & loss account, impacting reported financial performance. 

Scenario:

You issue Invoice in USD On Jul 2025 as USD 1,000 with currency Rate 4.2

• The system records:
  • Debit Accounts Receivable: MYR 4,200
  • Credit Sales: MYR 4,200

 As to prepare the financial report on Sept 2025, the customer has not yet paid, you can proceed revaluation in the system with the latest exchange rate as 4.3

• Revalued receivable = USD 1,000 × 4.30 = MYR 4,300.
• Difference = MYR 100 → Unrealized Gain.
• Adjustment entry:
  • Debit Accounts Receivable: MYR 100
  • Credit Unrealized Gain (P&L): MYR 100

Solution:

1. File - Module – Activate ‘Advance Currency’ Module 

1. General Ledger - Chart of Account – Under Current Assets, create a GL account code for ‘DEBTOR CONTROL FOREIGN EXCHANGE ACCOUNT’ 

 2. Under Current Liabilities - Create account named ‘CREDITOR CONTROL FOREIGN EXCHANGE ACCOUNT’

3. Ensure the account ‘UNREALISED FOREX GAIN’ is created under Other Income, ‘UNREALISED FOREX LOSS’ is created under Expenses

 4. Maintenance – Default Interface Accounts, select the account codes for 

• Debtor control foreign exchange account
• Creditor control foreign exchange account
• Unrealized forex gain
• Unrealized forex loss 

5. Create the invoice with USD 1,000 and exchange rate 4.2, system post RM 4,200 

 6. As to prepare the financial report on Sept 2025, the customer has not yet paid, user can proceed revaluation in the system with the latest exchange rate as 4.3 

To update the exchange rate as 4.3, go to Maintenance > Currencies > Select the particular currency code

Then click  (new button) to define Date01/09/2025 to 30/09/2025, then define the rate as 4.3

7. Navigate to Advance Currency Module – Auto Revaluation – AR. Update date as 30/09/2025 (The financial report preparation date). Select the Account From_ Account To_ (The Foreign Currency Customer Account) that you would like to revaluate 

8. The system revalues all outstanding foreign currency balances using the closing exchange rate on Sept as updated, 

 System displayed the customers’ outstanding invoices and revalues all outstanding foreign currency balances 

 Notice that the entire Revaluation amount to be adjusted is -280.50 Click Save 

9. Click ‘Advance Currency Revaluation Journal Link’, system generated 2 Journal Entries,
 one is of September, another one is October 

 10. Search the Journal for September, system will post the revaluation adjustment amount accordingly. 

 This adjustment ensures that the August financial report reflects the correct value of foreign currency balances.

11. Check Balance Sheet and Profit & Loss Report for 1/9/2025 – 30/9/2025, system post 280.50 to UNREALISE FOREX GAIN 

 12. Check another journal entries posted on October. System will automatically reverse the unrealized entry posted in September 

13. Check the Financial Report, the figure will be reversed  

Refer attachment for PDF file