FX Currency & Realized/Unrealized Gain/Loss Calculator
Converts USD, GBP, and EUR to Nigerian Naira (NGN), analyses buy/sell bank bid spreads, and computes realized vs unrealized foreign exchange gains and losses under IAS 21.
Computational Framework & Statutory Formulas
Base Currency Equivalent = Foreign Amount × Exchange Rate (₦)
FX Variance = Foreign Amount × (Settlement Rate - Initial Booking Rate)
Nigerian Economic & Statutory Context
Following the consolidation of foreign exchange markets by the Central Bank of Nigeria (CBN), companies translate foreign transactions at official Nigerian Autonomous Foreign Exchange Market (NAFEM) rates. Under IAS 21, monetary items denominated in foreign currency must be revalued at each reporting date, recognizing FX variances in the statement of comprehensive income.
Frequently Asked Questions (FAQ)
What is the difference between realized and unrealized FX gain/loss under IAS 21?
A realized FX gain or loss occurs when a foreign currency transaction is actually settled in cash (e.g. paying an import bill or receiving client funds). An unrealized FX gain or loss is an accounting revaluation of outstanding monetary assets or liabilities at the balance sheet date based on closing exchange rates.
Are unrealized foreign exchange losses tax-deductible under Nigerian tax law?
Historically, the FIRS disallows unrealized exchange losses because they do not represent incurred commercial outlays under Section 24 of CITA. Tax deductibility is generally granted upon actual realization when the transaction is completed.