This represents accounting for currency gains or losses that are realized or consummated. Example of this type includes the currency gains realized on the amounts payable to broker and the amount actually paid to the broker as recorded in the functional currency. The difference between the amount payable and the actual amount paid recorded in the functional currency represents the realized currency gains or losses. This is called ‘Consummated FX translation entries’.
This represents accounting for currency gains or losses that are seen on the continuing assets or liabilities of the investor. Example of this type includes the currency gains on the market value of the equity shares as recorded in the functional currency. This type of gain or loss is of temporary in nature and will be either reversed the next day or passed on an incremental basis, meaning that it is subject to change on a daily basis depending upon the FX rates prevailing at that day. This is called ‘Transient FX translation entries‘.