Foreign Currency
Complete guide to foreign currency period-end procedures including revaluation and exchange rate management.
Overview
FOREIGN CURRENCY CLOSE PROCESS
═══════════════════════════════════════════════════════════════════
TRANSACTION PERIOD-END
─────────── ──────────
│
Record transaction ─────────►│ Translation at
at transaction rate │ transaction date
│
│
Exchange rate changes ──────►│ Unrealized gain/loss
during period │ accumulates
│
│
Period-end revaluation ─────►│ Calculate gain/loss
│ Post to GL
│
▼
Financial Statements
(at closing rate)
Exchange Rate Management
Setting Up Exchange Rates
Navigate to: Lists > Accounting > Currency Exchange Rates
EXCHANGE RATE TABLE
───────────────────────────────────────────────────────────
Base Currency: USD
Currency Effective Date Exchange Rate Source
──────── ────────────── ───────────── ──────
EUR 01/31/2026 1.0850 Manual
GBP 01/31/2026 1.2650 Manual
JPY 01/31/2026 0.0067 Manual
CAD 01/31/2026 0.7425 Manual
Rate Type:
○ Current Rate (spot rate)
● Historical Rate (for specific date)
○ Average Rate (period average)
Rate Entry Methods
| Method | Description | Use Case |
|---|---|---|
| Manual Entry | User enters rates | Small volume |
| Scheduled Import | CSV file import | Daily rates |
| Integration | API from rate provider | Real-time |
Rate Types
| Type | Description | Used For |
|---|---|---|
| Current/Spot | Rate at specific date | Balance sheet items |
| Historical | Rate when transaction occurred | Fixed assets, equity |
| Average | Period average rate | Income statement |
| Consolidated | Rate for consolidation | Multi-subsidiary |
Revalue Open Foreign Currency Balances
What Gets Revalued
REVALUATION SCOPE
───────────────────────────────────────────────────────────
INCLUDED (Monetary Items):
├── Accounts Receivable (open invoices in foreign currency)
├── Accounts Payable (open bills in foreign currency)
├── Bank Accounts (in foreign currency)
├── Intercompany Balances
└── Foreign Currency Loans
EXCLUDED (Non-Monetary Items):
├── Fixed Assets (historical rate)
├── Inventory (historical rate)
├── Prepaid Expenses (historical rate)
└── Equity (historical rate)
Revaluation Process
FX REVALUATION STEPS
───────────────────────────────────────────────────────────
Prerequisites:
✓ Lock A/R (complete)
✓ Lock A/P (complete)
✓ Lock All (complete)
✓ Exchange rates entered for period-end
Navigation:
Setup > Accounting > Manage GL > Period Close Checklist
→ Revalue Open Foreign Currency Balances
Configuration:
┌────────────────────────────────────────────────────────┐
│ Subsidiary: All / Specific │
│ As of Date: 01/31/2026 │
│ Accounts: ☑ A/R ☑ A/P ☑ Bank │
│ │
│ Exchange Rate: Current Rate Table │
│ Post to: Unrealized FX Gain/Loss Account │
└────────────────────────────────────────────────────────┘
Process:
1. Click "Preview" to see expected adjustments
2. Review gain/loss amounts
3. Click "Revalue" to post journal entries
Revaluation Example
REVALUATION CALCULATION EXAMPLE
───────────────────────────────────────────────────────────
Open Invoice: €10,000
Original Recording (01/15/2026):
Rate: 1.0800 (€1 = $1.08)
USD Value: $10,800
Period-End Rate (01/31/2026):
Rate: 1.0850 (€1 = $1.085)
USD Value: $10,850
Unrealized Gain: $50
Revaluation Journal Entry:
Accounts Receivable $50 Dr
Unrealized FX Gain $50 Cr
Realized vs Unrealized Gains/Losses
Comparison
REALIZED VS UNREALIZED FX
───────────────────────────────────────────────────────────
UNREALIZED (Revaluation) REALIZED (Settlement)
──────────────────────── ────────────────────────
When: Period-end When: Payment/receipt
Example: Example:
Invoice €10,000 Invoice €10,000
Original: $10,800 Original: $10,800
Period-end: $10,850 Payment: $10,900
───────────────── ─────────────────
Unrealized Gain: $50 Realized Gain: $100
Entry: Entry:
A/R $50 Dr Cash $10,900 Dr
Unreal Gain $50 Cr A/R $10,800 Cr
Real Gain $100 Cr
Impact: Impact:
• Temporary (reverses) • Permanent
• Balance sheet only • Hits P&L
GL Accounts
| Account Type | Description | Statement |
|---|---|---|
| Unrealized FX Gain | Revaluation gains | P&L (below operating) |
| Unrealized FX Loss | Revaluation losses | P&L (below operating) |
| Realized FX Gain | Settlement gains | P&L (below operating) |
| Realized FX Loss | Settlement losses | P&L (below operating) |
| Cumulative Translation Adj | Consolidation FX | Equity (OCI) |
Multi-Currency GL Accounts
Account Currency Settings
ACCOUNT CURRENCY CONFIGURATION
───────────────────────────────────────────────────────────
Account: 1100 - Cash (Operating)
Settings:
┌────────────────────────────────────────────────────────┐
│ Account Currency: USD │
│ Revalue Open Balance: ☑ Yes │
│ Eliminate IC: ☐ No │
│ │
│ Sub-accounts (by currency): │
│ 1100.EUR - Cash EUR │
│ 1100.GBP - Cash GBP │
│ 1100.JPY - Cash JPY │
└────────────────────────────────────────────────────────┘
Each sub-account tracks balances in native currency
Revaluation adjusts to base currency equivalent
Consolidated Exchange Rates (OneWorld)
Rate Calculation
CONSOLIDATED EXCHANGE RATE CALCULATION
───────────────────────────────────────────────────────────
For multi-subsidiary consolidation:
Parent Currency: USD
Subsidiary Local Currency Rate Type
────────── ────────────── ─────────
US Operations USD N/A (same)
UK Operations GBP Current Rate
Germany EUR Current Rate
Japan JPY Current Rate
Period-End Consolidated Rates:
┌────────────────────────────────────────────────────────┐
│ Currency BS Rate IS Rate │
│ ──────── ─────── ─────── │
│ GBP 1.2650 1.2580 (average) │
│ EUR 1.0850 1.0820 (average) │
│ JPY 0.0067 0.0066 (average) │
└────────────────────────────────────────────────────────┘
Calculate Consolidated Rates Task
CALCULATE CONSOLIDATED RATES
───────────────────────────────────────────────────────────
Navigation: Period Close Checklist > Calculate Consolidated Rates
Prerequisites:
✓ All subsidiaries have currency rates entered
✓ FX Revaluation complete for all subs
Process:
1. System calculates weighted average rates
2. Balance sheet uses period-end rates
3. Income statement uses average rates
4. CTA (Cumulative Translation Adjustment) calculated
Result:
┌────────────────────────────────────────────────────┐
│ Consolidated Rates Calculated │
│ │
│ Period: Jan 2026 │
│ Subsidiaries Processed: 4 │
│ CTA Adjustment: $12,500 (to Equity) │
│ │
│ Status: ✓ Complete │
└────────────────────────────────────────────────────┘
Currency-Related Reports
Revaluation History Report
REVALUATION HISTORY
───────────────────────────────────────────────────────────
Navigation: Reports > Banking > Revaluation History
Output:
┌─────────────────────────────────────────────────────────────────┐
│ Period: Jan 2026 │
├────────────────┬────────────┬───────────┬───────────┬───────────┤
│ Account │ Currency │ Original │ Revalued │ Gain/Loss │
├────────────────┼────────────┼───────────┼───────────┼───────────┤
│ 1200 A/R │ EUR │ $108,000 │ $108,500 │ $500 G │
│ 1200 A/R │ GBP │ $63,250 │ $63,000 │ ($250) L │
│ 2000 A/P │ EUR │ ($54,000) │ ($54,250) │ ($250) L │
│ 1100 Cash │ JPY │ $6,700 │ $6,650 │ ($50) L │
├────────────────┼────────────┼───────────┼───────────┼───────────┤
│ TOTAL │ │ │ │ ($50) L │
└─────────────────────────────────────────────────────────────────┘
FX Gain/Loss Report
FX GAIN/LOSS SUMMARY
───────────────────────────────────────────────────────────
Period: Jan 2026
Realized Unrealized Total
──────── ────────── ─────
A/R $1,200 $500 $1,700
A/P ($800) ($250) ($1,050)
Bank $350 ($50) $300
─────────────────────────────────────────────────
Net $750 $200 $950
Accounts Used:
4500 - Realized FX Gain/Loss: $750
4510 - Unrealized FX Gain/Loss: $200
Best Practices
FX Management
| Practice | Recommendation |
|---|---|
| Rate timing | Enter rates before revaluation |
| Consistency | Same rate source each period |
| Documentation | Record rate sources |
| Review | Compare to prior period |
| Materiality | Focus on significant currencies |
Common Issues
| Issue | Cause | Resolution |
|---|---|---|
| Missing rates | Rate not entered | Enter rate for period |
| Wrong account | Not marked for reval | Check account settings |
| Large FX variance | Rate volatility | Document and explain |
| CTA imbalance | Consolidation issue | Review sub close sequence |
Related Topics
- Consolidation - Multi-currency consolidation
- Intercompany - IC FX elimination
- Period Close Checklist - All close tasks