Unrealized FX is the exchange difference recognised at the balance sheet date on foreign currency items that are still open, obtained by remeasuring them at the closing rate. Nothing has been paid or received: the position is simply restated to reflect where the rate stands on the closing date.
Only monetary items are remeasured. Receivables, payables, bank balances and loans denominated in a foreign currency are restated at the closing rate. Non-monetary items measured at historical cost, such as fixed assets or inventory, stay at the rate that applied when they were recorded. That distinction is the one most often missed in practice.
The two frameworks diverge sharply here, and the divergence is not cosmetic. IFRS takes unrealized differences through profit symmetrically: a latent gain and a latent loss both hit the result. French GAAP applies the prudence principle instead. Differences are recorded on balance sheet accounts 476 and 477, an unrealized loss triggers a provision for exchange risk, and an unrealized gain is not recognised at all. The same open position therefore produces a different result depending on the framework.
Once the item is settled the difference becomes realised, and the provision, where one was booked, is released. The distinction between the two states is developed in FX gain or loss.
Two practical points make the calculation fragile. It requires a complete inventory of open foreign currency positions at a precise date, and a single closing rate applied consistently across every entity. Where positions are intragroup, a rate applied on one side but not the other becomes an intercompany mismatch on top of a valuation question. The intercompany flow reconciliation agent surfaces that case before close rather than after.
