Adjust Exchange Rates - Bank Account

Chew_Kim_Poh

When you run the "Adjust Exchange Rates" job, the balance in the foreign currency Bank Accounts is revaluated and posted to the Realized Exchange Gain/Loss account. Does anyone know why in Navision it is posted to Realized account instead of Unrealized account?

mgill

The exchange rate fluctuation in the bank account are realized as soon as there is fluctuation in the rates. There is no unrealized portion therefore it is transferred to realized gain/loss account and non to unrealized.
Hope it will clear your doubt.

Chew_Kim_Poh

I understand technically why there is no unrealized and realized process for bank accounts in Navision (as there is no 2-step process as in AR/AP where there is an invoice followed by a payment step - and Navision does not automatically reverse out the unrealized amount after the valuation run).

However, I am having an issue with accountant and financial controller who reason that the foreign currency amount should be unrealized as it is not used / converted to local currency.

One probable business explanation why Navision does it this way is that the foreign currency bank account can be readily converted to local currency whereas for the outstanding AR it depends on when the customer pays us.

Has anyone ever explained this realized exchange gain / loss of bank account bank to an accountant yet?