1. Multicurrency Processing Implementation Guide
  2. Realized Gain/Loss Calculations

Realized Gain/Loss Calculations

To calculate realized gains and losses, you must post payments. Realized gains and losses are based on exchange rate fluctuations that occur between transactions that involve a foreign or alternate currency payment. When you post payments, the system calculates gains and losses based on whether the exchange rates changed from the date of the voucher to the date of the payment. If exchange rates changed, the system creates journal entries for the gains and losses.

If a foreign currency payment is involved, the potential exists for a standard gain or loss on a transaction. The gain or loss is based on exchange rate fluctuations between the foreign (transaction) currency and the domestic currency at the time the payment was received or issued. To calculate the gain or loss, the system multiplies or divides the voucher amount by the difference in the exchange rate from the time the voucher was entered and the time the payment was issued.

If an alternate currency payment is involved, the potential exists for two gains or losses on a transaction:

  • Standard gain/loss.

    An amount based on exchange rate differences between the foreign (transaction) currency and the domestic currency from the transaction date to the payment date.

  • Alternate currency gain/loss.

    An amount based on exchange rate differences between the alternate (payment) currency and the domestic currency. This gain or loss is the difference between these amounts:

  • The amount calculated by converting the alternate currency payment directly to the domestic currency.

    This is the amount that is actually deposited to or paid from the bank account.

  • The amount calculated by converting the alternate currency payment to the foreign currency to the domestic currency.

    Note: The document types for realized gains and losses are different for the Accounts Receivable and JD Edwards EnterpriseOne Accounts Payable systems. The system uses document type RC for receivables and PG for payables. The document type and the description Realized Gain or Realized Loss appear on the post reports.