Example, if an invoice in USD1,000 of rate 1.5 that is issued (or received) in September is reported as SGD1,500 after translation. It is not paid as at Dec (reporting year end), and the Dec rate for USD is 1.400
The same USD1,000 will not be worth SGD1,500 now, in December but SGD1,400 instead because the rate had dropped from 1.500 to 1.400.
If the amount is due to a creditor, it would have been overstated in the trade creditor (current liability) that a debt is owed by your company $1,500 instead of $1,400. (Unrealised Gain in exchange)
It is required to report the debt at SGD1,400.00 (table rate) instead of the earlier SGD1,500.00 (transaction rate)
For a more accurate financial statement, you need to revalue your customer, supplier and general ledgers that are in foreign currency.
The process of a revaluation is to correct (reinstate) the above to reverse out the differences (and posted to the Unrealised Exchange gain/loss accounts in the GL) so that the foreign currencies balances are reported as at the year end (or month end) rate, as it is reported.