Use the Currency Revaluation option to revaluate your ledger accounts and open items in foreign currencies, such as ledger accounts for bank accounts in dollars. Clicking the Currency Revaluation button will display a form showing the Currency Revaluation general day book that is registered for posting currency differences. The software suggests the current period, as well as the transaction date (the last day of the current period). This feature will create a day book page in the Currency Revaluation day book. Two day book lines will be created for every ledger account denominated in a foreign currency.
Note:
You can this feature only if all journal entries have been processed.
For journal entries that have been created, the currency amount will stay 0, which means that the fields Credit Currency and Credit Currency Amount will not be updated.
The dollar exchange rate is 1.20 (for 1 euro) and changes to 1.30. Currency revaluation will take place for ledger account 1205/Bank Account in dollars. The value of the ledger account in the company currency was $ 3,000.00 / 1.20 = € 2,500.00, and will now be $ 3,000.00 / 1.30 = € 2,307.69. The devaluation is € 2,500.00 - € 2,307.69 = € -192.31.
Ledger account at a rate of $ 1.20
LDGR
Description
Debit
Credit
Balance sheet
Debit currency
Credit currency
Balance sheet currency
Rate
1205
Bank account in dollars
€ 2,586.21
€ 86.21
€ 2,500.00
$ 3,000.00
$ 3,000.00
$ 1.20
Day book entry for general day book after currency revaluation
A company sends a $100 invoice to its foreign customer. When entering the invoice in the sales day book, the invoice amount is translated into the company currency in euro, based on the rate defined: 1 euro=1.112 dollars. The transaction amount amounts to $ 100 / 1.112- = € 89.93. Because the dollar rate changes to 1.152, the company decides to use the Revaluation feature to revaluate the open items.
Sales invoice has been created
Day book line in sales day book (LDGR 1300/Debtor in euro)
LDGR
Invoice/reference
Currency
Currency amount
Transaction amount
Rate
8400/Turnover
20194444
Dollar
$ 100
€ 89.93
1.112
Journal
LDGR
Invoice/reference
Currency amount
Transaction amount
Invoice amount
Invoice currency
1300/Debtor
20194444
€ 89.93
€ 89.93
$ 100
Dollar
8400/Turnover
20194444
€ -89.93
€ -89.93
Open item
Invoice/reference
Currency
Debit currency amount
Outstanding currency amount
Debtor amount
Outstanding transaction amount
20194444
Dollar
$ 100
$ 100
€ 89.93
€ 89.93
Revaluation of open items due to new exchange rate of 1.1152
Example of currency revaluation of ledger account