About Exchange Gains and Losses on Settlement

When you apply multicurrency payments, credit notes, debit notes, or adjustments to another document, if the exchange rate used for the applied document is different from the current rate of the apply to document, Accounts Payable recognizes an exchange gain or loss, as follows:

Source amount x current rate of applied document

Less:

Source amount x current rate of apply-to document

Equals

Exchange gain (loss) or realized exchange gain (loss)

Note: If you use the Realized and Unrealized Exchange Gain/Loss method to record exchange gains and losses, any gains or losses arising from differences in exchange rates at the time of settlement are called “realized” gains or losses.

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