Where there is a fair value profit, the residual profit is calculated by subtracting from the profit any exchange gain, and adding to it the amount of any exchange loss.

Where the exchange gain exceeds the fair value profit, the difference between the two is the residual loss.

Where there is a fair value loss, the residual loss is calculated by adding to the loss any exchange gain or subtracting from it any exchange loss.

Where the exchange loss exceeds the fair value loss the difference between the two is the residual profit.

Residual profits and losses are amounts recognised in determining a company’s profit or loss for a period for the purposes of section 85B(1)7 of the Finance Act 1996 and paragraph 17B(1)8 of Schedule 26 to the Finance Act 2002.