Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.

Anonymous
Anonymous asked in 商業及金融其他 - 商業及金融 · 1 decade ago

Exchange reserve

At the begining of the year, there is an exchange reserve on the balance sheet due to change in the book rates.

i.e. Dr. Assets/ liabilities

Cr. Exchange reserve

At the end of the year, the exchange reserve will be transfer to exchange gain.

My question is whether the exchange reserve transferred to exchange gain at the end of the year is realised or unrealised.

Thx~

1 Answer

Rating
  • ?
    Lv 7
    1 decade ago
    Favorite Answer

    As I know, an unrealized gain occurs when the market value of the securities are greater than their carring value . Normally, unrealized gains are not recognized.When the allowance method is used, however, unrealized gains are recognized when the allowance to reduce to market account is reduced. The unrealized gain can be recored only to the extent of the write-downs for unrealized loss. That is, under the allowance method, the valuation of the portfolio can never exceed the original cost of the total portfolio. An unrealized gain(i.e., reduction of prior unrealized lossed) is recorded in an adjusting entry at the end of the accounting period. Normally, under the direct method, previously recorded write-downs are not reversed and unrealized gains are not recognized. Recognition comes about when they are realized through the sale of the securities.

    Source(s): 月光光
Still have questions? Get your answers by asking now.