Revaluation Process for Dynamics GP

The Revaluation process in Dynamics GP is a function to recalculate the functional currency amount of stored transactions that are entered in a currency other than your functional currency.  It further allows the user to recalculate the functional currency balances for accounts, based on a specific exchange rate.

During the revaluation process, you can identify if the process calculates unrealized gains and losses or realized gains and losses.  Unrealized gains and losses postings may be reversed.  Realized gains and losses may not be reversed.

Unrealized Gains and Losses

An unrealized gain or loss is a transaction that have not been settled.  The unrealized gain or loss is the amount that would be posted as a realized gain or loss if the transaction was settled at the exchange rate on the date of the revaluation.  When accounts held in a currency other than your functional currency are revalued, the account’s balances are calculated to convert the account’s balance to your functional currency on the revaluation date, and an unrealized gain or loss is posted.  The user should revalue accounts and post transactions for unrealized gains and losses so your financial statements reflect your company’s current financial position.

Realized Gains and Losses

A realized gain or loss can be calculated for a transaction when applying documents in Receivables Management and Payables Management.  A realized gain or loss from revaluation can occur when the user revalues accounts or transactions in the Multicurrency Revaluation window.  The exchange rate for the transaction date is compared to the exchange rate for the date the transaction was settled and a realized gain or loss for the change in the exchange rate is posted to a realized gain or loss account.

A realized gain or loss from applying documents is the difference in the functional currency values of an originating currency payment when compared to the original transaction or invoice in the same originating currency that it’s being applied to.

Accounts Used when Posting Revaluation Transactions

The revaluation transactions are posted to the posting account being revalued or to the financial offset account and the realized or unrealized gain or loss account. You can use the Select Account Currencies window to select which accounts to revalue and whether to post the revaluation results to the account or to the financial offset. By posting to the account being revalued, the account reflects the appropriate value due to the gain or loss posted. By posting to the financial offset account, the offset account is posted with the gain or loss and the posting account’s value won’t be adjusted for the gain or loss.

The realized and unrealized gain and loss accounts assigned to the rate type and currency are used when posting revaluation transactions. If an account isn’t assigned to the rate type, the account assigned to the currency is used. If an account isn’t assigned to the currency, the realized and unrealized gain and loss accounts in the Posting Accounts Setup window for the Financial series are used.

Recognizing Gains and Losses in the Financial Series

Only one rate type per currency can be identified when revaluing General Ledger transactions. Accounts that have a summary amount for a specified currency ID will be revalued using the same exchange rate, regardless of the rate type used on the transaction.

To recognize gains and losses in the Financial series:

  1. Open the Multicurrency Revaluation window.  Financial – Routines – Financial – Revaluation
  2. Enter a name for the revaluation option.
  3. Mark the Post option if you want to post transactions for gains and losses, or mark the Print Report Only if you want to print the Revaluation Report without posting.
  4. Select the Financial series.
  5. Select whether you want to calculate an unrealized or realized gain or loss.
  6. Enter the posting date if you are posting the revaluation transactions.
  7. Mark the Reversing Transaction option and enter a reversing date, if you want to post reversing transactions for unrealized gains and losses transactions created in the revaluation procedure.
    • Note*  If you are calculating realized gains and losses, you won’t be able to post a reversing transaction.
  8. Select the year and period that you want to revalue transactions in the Financial series.
    • If you select Current Year or Current Period, the date will be based on the fiscal year for the current user date. If you select Other Year, you’ll need to enter a year; if you select Other Period, you’ll need to enter a fiscal period. Only the current year or the most recent historical year can be selected.
      • If you selected Net Change as the revaluation method for an account using the Select Account Currencies window, the difference of the account balance between the first and last days in the selected period will be revalued.
      • If you selected Period Balances for an account’s revaluation method, the account balance on the last day of the selected period will be revalued. If you select End of Period as the User Date From option in the scrolling window, a valid exchange rate will be used for the revaluation based on the period selected.
  9. Mark the currency IDs and enter the rate type IDs that you want to revalue.
  10. Indicate the date you want to use to determine the exchange rate used for revaluation.
  11. Choose the Restrictions button to set up a restriction to specify the accounts you want to revalue.
  12. Choose the Revalue button to revalue the currencies you’ve marked.  A journal entry is created for each currency being revalued.
    • Unrealized and realized gains and losses for the originating currency are recorded as zero amounts with zeros for the exchange rates.
    • Unrealized and realized gains and losses for the company’s functional currency are recorded.

The Revaluation Report might be printed, depending on how your system has been set up. This report displays information about the transactions that were revalued.  The Revaluation Summary and Detail Breakdown Registers also might be printed.  These reports display information about the revaluation transactions posted.

Recognizing Gains and Losses in the Sales or Purchasing Series

When revaluing Sales or Purchasing transactions, you can enter a document cutoff date and choose to revalue transactions by currency ID or by transaction.  If you choose to revalue by currency ID, all transactions using a specified currency ID will be revalued using the same exchange rate, regardless of the rate type used on the transaction.  If you choose to revalue by transaction, transactions are revalued by the currency and rate type to the currency and rate type used on the transaction.

If you post reversing transactions for unrealized gains and losses amounts created during the revaluation, the unrealized gain/loss revaluation amounts won’t update the original transactions.  However, distributions will be created in the subledger and in General Ledger.  If you post revaluation transactions and didn’t select to reverse revaluation transactions, the revaluation amounts will update the original transactions.  Distributions also will be recorded in the subledger and in General Ledger.

Reversing entries will be stored in the same batch as the original revaluation transactions.  They will have the same journal entry number but will use a different audit trail code.

To recognize gains and losses in the Sales or Purchasing series:

  1. Open the Multicurrency Revaluation window.  Financial – Routines – Financial – Revaluation
  2. Enter a name for the revaluation option.
  3. Mark the Post option if you want to post transactions for gains and losses, or mark the Print Report Only if you want to print the Revaluation Report without posting.
  4. Select the Sales or Purchasing series. Only transactions for open item customers will be revalued in the Sales series.
  5. Select whether you want to calculate an unrealized or realized gain or loss.
  6. Enter the posting date if you are posting the revaluation transactions.
  7. Mark the Reversing Transaction option and enter a reversing date, if you want to post reversing transactions for unrealized gains and losses transactions created in the revaluation procedure.
    • Note*  If you are calculating realized gains and losses, you won’t be able to post a reversing transaction.
  8. Enter the document cutoff date.  This date is used to determine if a document should be included for revaluation. You won’t be able to enter a document cutoff date that is after the posting date.
  9. Select whether to revalue transactions By Currency ID or By Transaction from the Rate Types list.
    • The By Currency ID option indicates that all transactions using a specified currency ID will be revalued using the same exchange rate, regardless of the rate type used on the transaction.
    • The By Transaction option allows transactions to be revalued by the currency and rate type to the currency and rate type used on the transaction. When this option is selected, you won’t be able to modify the rate types in the scrolling window.
  10. Mark the currency IDs and enter the rate type IDs that you want to revalue.
  11.  Indicate the date you want to use to determine the exchange rate used for revaluation.
  12. Choose the Restrictions button to set up a restriction to specify the document types you want to revalue.
  13. Choose the Revalue button to revalue the currencies you’ve marked.

Unrealized and realized gains and losses for the originating currency are recorded as zero amounts with a zero exchange rate and a functional currency value.

Posting Results in General Ledger
Detail One journal entry per document
Summary One journal entry per currency rate type
Summary with account level posting One journal entry per document

 

The Revaluation Report may print, depending on how your system has been set up.  This report displays information about the transactions that were revalued.  The Revaluation Summary and Detail Breakdown Registers also may print.  An exception report will print if a situation prevents the revaluation from occurring.

Account Prerequisites to Utilize the Revaluation Process for an Account

Setup GL Account for Revaluation

  • Cards – Financial – Account
  • Select Currency
  • Click Revalue Account

 

Post Result To

Indicate if the results of a revaluation should be posted to the same account or a financial offset account. Mark the Revalue Account option before this field is available.

Account

Mark Account to post to a realized or unrealized gain/loss account and the offset to the posting account. This will calculate the correct average exchange rate and the account will reflect the appropriate value.

 

Financial Offset

Mark Financial Offset to post the results to the financial offset account.

 

Revalue Account

Mark to revalue the selected account when the revaluation procedure is performed. Typically, cash accounts for another currency are revalued to calculate the unrealized gain or loss based on fluctuating exchange rates.

Revaluation can be based on the net change amount for the revaluation period or based on the period balance.

Net Change

Mark Net Change to revalue the selected account based on the net change, or the difference in the account’s beginning and ending balances for the revaluation period.

 

Period Balances

Mark Period Balances to revalue the selected account based on the period balance, or the current balance of the account on the last day of the revaluation period.

 

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