How to record FX loss on foreign term deposits
Recognizing the unrealized loss on a foreign-denominated fixed term deposit due to adverse exchange rate movement.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unrealized FX Loss | Expense | 850.00 | - |
| Foreign Term Deposit | Asset | - | 850.00 |
💡 Accountant's Note
At the reporting date, the foreign currency balance of the term deposit is revalued using the spot rate. If the local currency equivalent has decreased, an unrealized loss is recognized.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure the sub-ledger for investments is configured for multi-currency revaluation at month-end.
⚠️ Audit Flags
Significant fluctuations in cash equivalents without corresponding cash flow activity.
📄 Required Documentation
Bank statement in foreign currency and the verified spot rate from a reliable source like OANDA.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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