Manage exchange rate changes

Current accounting rules require that the balances of your foreign currency bank accounts are shown on the Balance Sheet at a fixed stated, exchange rate.

The Foreign Bank Revaluation option allows you to revalue the balance of your bank account using a new exchange rate. This displays:

• The current Balance of the bank account in the account's operating currency.
• The Old balance. This is the current balance of the bank account in your base currency.
• The Old rate. This is the effective exchange rate. It is calculated from the foreign currency balance and the base currency balance.
• The New rate. This is the current exchange rate, stored in the foreign currency exchange rate table in Accounting System Manager. If the currency is amendable, you can change this exchange rate here.
• The New balance. This is the calculated balance of the bank account, in your base currency, using the New rate.

Once saved, any currency gains/losses are posted to the nominal ledger accounts shown in the Transaction Details. These are the nominal ledger account specified for the bank account and the default nominal account specified for Exchange Differences.

The revaluation is calculated in the following way:

1.	Foreign currency balance		=	New base currency value.
	New exchange rate

2.

(Old base currency value) - (new base currency value)

=

exchange difference (gain or loss).

Note: You cannot revalue a bank account if the foreign currency account balance and the base currency account balance are zero.

• A revaluation report is produced. This shows the balances of the bank account, the exchange rate used, and the nominal ledger adjustment that has been posted.
• The foreign currency account balance and the base currency account balance are adjusted.
• Any currency gains/losses are posted to the nominal account for the bank account and the default nominal account for Exchange Differences (in the Nominal Ledger).