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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Exchange rate adjustme...
Small and medium business | Business Central, N...
Answered

Exchange rate adjustment for vendor and bank

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Posted on by YC-19090515-0 82
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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  • Suggested answer
    Dhiren Nagar Profile Picture
    Dhiren Nagar 2,898 Super User 2026 Season 1 on at
    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.
     

    ✅ Tick the checkbox below to mark the answer as verified, if it helped resolve your question.

    Regards,
    Dhiren.
     
  • Verified answer
    OussamaSabbouh Profile Picture
    OussamaSabbouh 13,008 Super User 2026 Season 1 on at
    Hello,
     
    Yes, this is all standard and correct Business Central behavior: when you run Adjust Exchange Rates, vendors/customers post FX differences to Unrealized Gain/Loss because the transaction isn’t settled yet, while bank accounts post directly to Realized Gain/Loss since cash is considered already realized by design. Later, when you post the vendor payment, BC automatically reverses the unrealized gain/loss and posts the actual realized gain/loss based on the payment’s exchange rate. Nothing is wrong with setup or posting — this is exactly how BC’s currency revaluation logic is supposed to work.
     
    Regards,
    Oussama Sabbouh
  • Suggested answer
    RockwithNav Profile Picture
    RockwithNav 8,967 Super User 2026 Season 1 on at
    Yes without going in much detail - This is the correct behavior :) 

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