R12/XTR: Journal: Realized Entries Not Generated Fx Forward 'Fair Value', Simplify Realized Gain/Loss, FX SPOT Creating imbalanced Journal (Doc ID 1249494.1)

Last updated on AUGUST 29, 2023

Applies to:

Symptoms

Issue 1: Realized Journal entries not generated for FX Forward Contract revaluing FX Forward deals using 'Fair Value'. In other words: Realized Journal entries not generated for FX Forward Contract revaluing FX Forward deals using both 'Fair Value' and 'Market'. In both cases the unrealized journal entries are being created. However, no entry is being generated for the realized transaction.

Old Behavior
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In the final reval period for an FX Forward with Fair Value pricing model, there are two lines in the revaluation details window.
One for UNREAL amount type (corresponding to the incremental gain/loss for the current period) and one for REAL amount type (corresponding to the cumulative gain/loss since the beginning of the deal).
The user has a field to enter a manual value against both the REAL and UNREAL amount.
The manual value that the user enters is meant to represent the current fair value of the instrument.

In case of the UNREAL amount, everything works as the customer expects. If the final fair value of the instrument is 800, when the user enters it in the overwrite field, the UNREAL is calculated as 800 minus all the previous period UNREALs.

In case of the REAL amount, in order to get to the correct value shown as the realized gain/loss, the user has to enter the amount equal to the sum of the current overwrite value on the UNREAL line and all the prior period UNREALs.

This part is confusing for the user because this sum does not have any business meaning. It is difficult to remember and explain to the users who are likely to make mistakes.

Issue 2: In the Daily Journals form ,it was showing Credit for the Debit line,when the journal amount for foreign currency is zero.

Issue 3:  FX Spot Deal accounting creating imbalanced Journal Entry

Understand that treasury using rate from the GL rates table for converting foreign currency balance.But the rate (transaction rate) entered for FX spot differ from the GL daily rates table and can have different transaction rates on the same date, which you cannot enter different rate on the same date in GL daily rates table. So, there is always chance of having transaction rate different than the GL daily rate. based on this two limitations, you think it should consider the transaction rate while converting into ledger currency, instead of using GL Daily rates table.

For FX transaction it should consider the transaction rate.

Changes

Cause

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