Foreign currency and FX revaluation forecast
FX forecasts can mix sales, receivables, revaluation gain or loss, cash settlement, and hedging entries. A journal-driven forecast separates the accounting effect from the cash timing.
How do I forecast foreign exchange gain or loss?
Record the foreign currency sale or purchase first, then add period-end revaluation if needed. At settlement, record cash receipt or payment and any realized gain or loss separately.
1) Separate revaluation from settlement
Revaluation changes the carrying amount of receivables, payables, or forward contracts. Settlement is the point where cash moves. Keeping these entries separate avoids confusing non-cash PL movement with cash flow.
2) Model forward exchange valuation as a distinct line
If the plan includes forward exchange contracts, keep valuation gain or loss and final settlement apart from the underlying AR or AP. Hedge accounting treatment should be confirmed separately.
3) Review rate assumptions
FX forecasts depend on assumed rates, settlement month, currency exposure, and accounting policy. Use the model as planning support, not as a substitute for treasury or accounting review.