Compute Unrealized Gain/Loss and Provisions for Valuated Forex Contract

Hi Everyone,
Can anyone tell me how unrealized gain/loss or provisions were computed for forex contract?
I created a spot/forward transaction with the following details:
Product Type: 60A
Transaction Type: 102
Buy Currency: USD
Sell Currency: NZD
Local Currency: SGD
Forward Rate: 0.6864
Spot Rate: 0.7045
Swap Rate: 0.199-
I used midyear valuation w/ reset as a valuation category when I execute valuation in TPM1.
Your response would be greatly appreciated.
Thank you.
Canto

Hi Murlidhar,
Thank you for the response. Yes, I understand that a gain/loss can be realized based on exchange rate differences between when invoice entered/posted and when paid. That's only part of the gain/loss in minds of the accountants. The other part is gain/loss from time that cash was put into bank account. For example, we spend $100 USD to purchase and deposit R$167 BRL into Brazil bank account. Three months later that same R$167 BRL is worth only $85 USD. At that time we post and pay Brazil invoice on same day in amount of R$167 with no exchange gain/loss on the invoice. System posts credits of R$167 BRL and $85 USD to bank account G/L account. System does not record gain/loss on payment because invoice currency translation date and paid date are same. However, the bank account G/L account balance now reflects R$0 BRL and $15 USD on which system calculates a $15 USD unrealized gain/loss at month end. This unrealized gain/loss on the bank G/L account posts and reverses each month just as you said but never goes away. In minds of accountants the $15 USD gain/loss should be recognized. How best to recognize the $15 USD gain/loss, that is the question.
Thanks
Steve

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Compute Unrealized Gain/Loss and Provisions for Valuated Forex Contract

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