Saturday, March 5, 2011

Revaluation

Revaluation:
Revaluation adjusts liability or asset accounts that may be understated or overstated at the end of a period due to a significant fluctuation in the exchange rate between the time the transaction was entered and the end of the period. It restates balances using proper period end rate.
Revaluation is the process of revaluing accounts that have transactions denominated in foreign currency. This is done for the account balance, not individual transactions. Revaluation can be done on any account, but typically,this is done for balance sheet accounts, whose balance is made up of open transactions (ie. Accounts Payable, Accounts Receivable). Revaluation reflects the change in conversion rates between the date of the transaction and the date of the balance sheet.


When revaluation is run, a journal entry is created that either increases or decreases the functional currency amount for that account, based on the fluctuation of the exchange rate. The offset for this journal is a predefined Unrealized Gain/Loss Account.


The revaluation adjustment is created in the functional currency - this is where the fluctuation is. Remember, the foreign currency of the transaction will stay the same: it is the functional currency equivalent that fluctuates.


When looking at the revaluation entry on the Enter Journals form, Entered Debits/Credits should be equal to zero. The Converted Debits/Credits should be the revaluation adjustment - there should be an amount here.
You can specify period-to-date (PTD) or year-to-date (YTD) to revalue income statement accounts using PTD or YTD balances by setting the profile option 'GL: Income Statement Accounts Revaluation Rule'.

The following values are available:
PTD: Only PTD balances will be revalued for income statement accounts.
If you select PTD, the Revaluation program only revalues the PTD balances of your income statement accounts but continues to revalue YTD balances for balance sheet accounts.

Income Statement Accounts:

Are revalued on the basis of the PTD or YTD balances, in accordance with the
Income Statement Rule profile option


PTD Script:
select code_combination_id,TRANSLATED_FLAG, CURRENCY_CODE,
PERIOD_NET_DR, PERIOD_NET_CR,
PERIOD_NET_DR_BEQ, PERIOD_NET_CR_BEQ,
from GL_BALANCES
where CODE_COMBINATION_ID = 9999
SET_OF_BOOKS_I D = 123
AND PERIOD_NAME = MON


YTD: Only YTD balances will be revalued for income statement accounts.
If you specify YTD, then the revaluation program behaves as it did before, revaluing YTD balances for both your income statement and balance sheet accounts, the balance sheet is always revalued using the YTD method


YTD Script:
select code_combination_id,TRANSLATED_FLAG, CURRENCY_CODE,
PERIOD_NET_DR, PERIOD_NET_CR, BEGIN_BALANCE_ DR , BEGIN_BALANCE_ CR ,
PERIOD_NET_DR_BEQ, PERIOD_NET_CR_BEQ,
BEGIN_BALANCE_DR_BEQ,BEGIN_BALANCE_ CR _BEQ
from GL_BALANCES
where CODE_COMBINATION_ID = 9999
SET_OF_BOOKS_I D = 123
AND PERIOD_NAME = MON.

When you reverse the revaluation entry, General Ledger defaults the reversal period to the next period. You can change the reversal period by choosing More Actions from the Enter Journals form. Choose the period you want to reverse the revaluation in. 
You can rerun revaluation more than once in a period. Based on the Revaluation calculation, any additional journal entries posted after the initial Revaluation journal has been posted, will be picked up in the balances that are subsequently revalued in that same period. The subsequent Revaluation journal entry will then represent the incremental change in the revalued balance, due to the additional journal entries posted after the initial Revaluation.
Choose Revalue. General Ledger launches a concurrent process to revalue your account balances.
The process names your revaluation batch in the following format: Revalue <Period Name> <Concurrent Request Date> <Concurrent Request Time>; for example, Revalue JAN– 11 07– MAR– 11 15:00:00.

Use the Revaluation Execution Report to review the status of your account revaluation. General Ledger automatically generates this report when you run revaluation.

Revaluation Execution Report:

Review the details of your account balance revaluation and the journal batches created after running revaluation. The report includes the currencies and revaluation rates used to revalue your accounts, the unrealized gain/loss account in which you recorded net gains and losses, and the range of accounts revalued. The report also prints the names of batch and journals General Ledger creates for each foreign currency when you revalue your accounts, as well as the total debits and credits of the created batch. General Ledger automatically generates this report when you run revaluation.

Profile options related to Revaluation.
1.GL Revaluation: Days to Roll Forward Daily Rates
2.GL: Income Statement Accounts Revaluation Rule
3.GL Revaluation: Tracking by Cost Center
4.GL Revaluation: Validate Gain/Loss Accounts
5.GL/MRC Revaluation: Use Primary Book Currency Instead of Entered Currency
6.Inflation Accounting Revaluation tolerance

GL Revaluation: Days to Roll Forward Daily Rates:
Use this profile option to determine how many days into the past the Revaluation
program will go to find a daily rate for the currency, when Revaluation is
being run  using Daily Rates. If no rate is defined for the date the Revaluation is
being run for,  General Ledger will use this profile to determine how many days in
the past it can go  to in order to find a rate. If a rate is found, this is used in the
revaluation. If no rate is  found, revaluation for that currency will fail, and the
execution report will show  “Missing Rate”. The default for this profile is 0 –  GL
 will only use the  rates specified for the date requested in the program submission.
You can only review  this profile option at the user level. System Administrator
can set this profile option at  the site, application, or responsibility level.

GL: Income Statement Accounts Revaluation Rule:
Use this profile option to select either period-to-date (PTD) or year-to-date (YTD) income

statement account balances for revaluation.


The following values are available:
PTD: Only PTD balances will be revalued for income statement accounts.
YTD: Only YTD balances will be revalued for income statement accounts.


The default for this profile option is YTD. You can only review this profile option at the
user level. System Administrator can set this profile option at the site, application, or
responsibility level.

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