Exchange rate adjustment for vendor and bank

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Posted on by YC-19090515-0

I did the exchange rate adjustment on Dec 31, 2025 for vendor and bank with the exchange date on that day. The differences for the individual currency balances were posted in the Unrealized Gains/loss Account which is consistent with the set up in Currencies. But for the bank, the differences were posted in the realized gain/loss account. Is this correct entry? And after the adjustment, when we create a payment journal for the vendor, the adjustment gain/loss were automatically reversed. Is this also correct transaction in Business Central?

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Dynamics 365 Business Central

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Dhiren Nagar 1,869 on at

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Hi,

Yes this is correct and standard following is the explanation.

1- Realized Gain/Loss on Bank - Bank being a monetary asset is revalued as a balance and not entry by entry i.e. entire foreign currency balance on the day of adjustment is converted to LCY and any difference between original LCY and calculated figure is booked as Gain or loss. Now as it is monetary asset all the gain or loss is directly booked as Realized Gain/loss.

2- Reversal of Unrealized Gain/loss on Vendor- Usually when the invoice or open entry is closed by payment or any other entry, any unrealized gain or loss is reversed and the difference of exchange rste between payment and invoice is posted as realized gain or loss. In this case if unrealized gain or loss is not reversed it will create duplication. To allow realized gain or loss to be booked, unrealized gain or loss on open entry will be reversed.

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Regards,

Dhiren.

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