Open topic with navigation

> Foreign currency processing / Foreign currency transactions / Foreign account revaluation

Foreign account revaluation

About foreign account revaluation

You will encounter exchange rate fluctuations because of the time between entering invoices onto the system and making or receiving payment for those invoices. Use this option to manage exchange rate differences in foreign sales and purchase transactions.

Sage 200 deals with these exchange rate differences in two ways:

Automatic revaluation of transactions

Sage 200 automatically revalues your foreign currency transactions when they are part or fully allocated. Losses or gains made from these exchange rate fluctuations are automatically posted to your exchange rate differences nominal account.

You can view the associated revaluation transactions in the Transaction Enquiry window, by selecting Alloc/Reval History from the Select drilldown drop-down list.

Examples of revaluing transactions
Fully allocated sales invoice

You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Default Sales Account   666.67
Debtors Control Account 666.67  

You enter a receipt of $1000 for this invoice, the exchange rate has changed to £1 = $1.6. The payment is worth £625.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Bank Account 625.00  
Debtors Control Account   625.00

The receipt is worth £41.67 less than the invoice. When the receipt is allocated to the invoice, the revaluation takes place. The following values post to the Nominal Ledger:

Nominal Account Debit Credit
Exchange Differences Account 41.67  

Debtors Control Account

   41.67
Fully allocated purchase invoice

You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Default Purchase Account 666.67  
Creditors Control Account   666.67

You enter the payment of $1000 for this invoice, the exchange rate has changed to £1 = $1.6. The payment is worth £625.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Bank Account   625.00
|Creditors Control Account 625.00  

The payment is worth £41.67 less than the invoice. When the payment is allocated to the invoice, the revaluation takes place. The following values post to the Nominal Ledger:

Nominal Account Debit Credit
Exchange Differences Account   41.67

Creditors Control Account

 41.67  
Part allocated sales invoice

When a receipt is part allocated to an invoice, only the portion of the invoice that is paid, is revalued.

You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Default Sales Account   666.67
Debtors Control Account 666.67  

You enter a receipt of $500. The exchange rate has changed to £1 =$1.6. The receipt is worth £312.50.

The following values post to the nominal ledger.

Nominal Account Debit Credit
Bank Account 312.50  
Debtors Control Account   312.50

This receipt is allocated to the invoice. To calculate the revaluation, the base currency allocated value of the invoice and the receipt are compared. The difference between the values is posted to the exchange differences account.

In this example:

  • The invoice value of the $500 (£1 = $1.5) is £333.33.
  • The receipt value of the $500 (£1 = $1.6) is £312.50.
  • The difference is a loss of £20.83.

The following values post to the nominal ledger:

Nominal Account Debit Credit
Exchange Differences Account 20.83  

Debtors Control Account

   20.83

Every time a receipt is allocated to the invoice this revaluation occurs.

You enter another receipt of $250. The exchange rate is £1 = $1.4. The receipt is worth £178.57. The following values post to the nominal ledger:

Nominal Account Debit Credit
Bank Account 178.57  
Debtors Control Account   178.57

You allocate the receipt to the invoice. The revaluation occurs.

In this example:

  • The invoice value of the $250 (£1 = $1.5) is £166.67.
  • The receipt value of the $250 (£1 = $1.4) is £178.57.
  • The difference is a gain of £11.90.

The following values post to the nominal ledger.

Nominal Account Debit Credit
Exchange Differences Account   11.90

Debtors Control Account

 11.90  
Part allocated purchase invoice

When a payment is only part allocated to an invoice, only the portion of the invoice that is paid is revalued.

You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.

The following double entry posts to the nominal ledger:

Nominal Account Debit Credit
Default Purchase Account 666.67  
Creditors Control Account   666.67

You enter a payment of $500. The exchange rate has changed to £1 =$1.6. The payment is worth £312.50.

The following values post to the nominal ledger.

Nominal Account Debit Credit
Bank Account   312.50
Creditors Control Account 312.50  

This receipt is allocated to the invoice. To calculate the revaluation, the base currency allocated value of the invoice and the receipt are compared. The difference between the values is posted to the exchange differences account.

In this example:

  • The invoice value of the $500 (£1 = $1.5) is £333.33.
  • The payment value of the $500 (£1 = $1.6) is £312.50.
  • The difference is a loss of £20.83.

The following values post to the nominal ledger:

Nominal Account Debit Credit
Exchange Differences Account   20.83

Creditors Control Account

 20.83  

Every time a payment is allocated to the invoice this revaluation occurs.

You enter another payment of $250. The exchange rate is £1 = $1.4. The payment is worth £178.57. The following values post to the nominal ledger:

Nominal Account Debit Credit
Bank Account   178.57
Debtors Control Account 178.57  

You allocate the receipt to the invoice. The revaluation occurs.

In this example:

  • The invoice value of the $250 (£1 = $1.5) is £166.67.
  • The payment value of the $250 (£1 = $1.4) is £178.57.
  • The difference is a gain of £11.90.

The following values post to the nominal ledger.

Nominal Account Debit Credit
Exchange Differences Account 11.90  

Debtors Control Account

   11.90
Revalue outstanding amounts on customer or supplier accounts

Use the Foreign Account Revaluation option in the Sales or Purchase Ledger to make sure that the value of outstanding transactions on your foreign currency accounts reflects the latest currency exchange rate.

Sage uses the following rules during revaluation:

Revaluation rules

When your foreign currency accounts are revalued, the following rules are applied:

  • Currencies using a Single exchange rate.

    The revaluation uses the exchange rate specified in the exchange rate table in Accounting System Manager.

    If you set the currency exchange rate to be amendable and have the necessary user permissions you can change the exchange rate.

  • Currencies using Period exchange rates.

    The revaluation uses the exchange rate set for the period applicable to the receipt date or revaluation date.

  • Currencies using both single and period exchange rates.

    The revaluation uses either the single or the period exchange rate depending on the option selected in the customer account. Each customer that uses this currency will be set to use either the single rate or the period rates.

  • Transactions with a Query flag against them are not revalued.
  • If the invoice and the receipt have the same exchange rate, no revaluation takes place.
  • The revaluation only posts the value of the difference in the exchange rate, and not the full base value of the transaction.

When transactions are automatically revalued, the following rule is also applied:

  • When an invoice is paid in a future period, the revaluation values are posted to the deferred posting file.

When you use Foreign Account Revaluation to revalue outstanding amounts, the following rules are also applied:

  • Only outstanding or part outstanding transactions up to the specified Revaluation date, are revalued.
  • If the Revaluation date is in a future period, the revaluation values are posted to the deferred postings file.
Outcomes
Before you begin

You must have:

To revalue foreign accounts in Sales or Purchase Ledgers

Open: Period End Routines > Foreign Account Revaluation.

  1. Choose the Currencies to update.

    The exchange rates used for the revaluation depend on how each currency is set up in the Accounting System Manager module:

    Revalue all currencies

    Select this to revalue all foreign currency customer accounts.

    This uses the exchange rate for each currency as it is set up in the Accounting System Manager module. You cannot change the exchange rate here.

    Revalue single currency

    Select this to revalue all customer accounts for the specified currency.

    • If the Currency uses a Single exchange rate, you can change the Exchange rate here, if required.
    • If the Currency uses a Period exchange rate, the Exchange rate box shows the period exchange rate that has been set for the date selected in the Revaluation Date box. You cannot change the Exchange rate.
    • If the Currency you select has been set as both a Single & Period currency, the Exchange rate box shows a single exchange rate as well as the period exchange rate for the selected Revaluation Date. You can change the Exchange rate if required.
  2. Enter a Revaluation date. All outstanding transactions up to this date are revalued.

  3. Choose your Posting option.

    Produce report only

    Select this to print a report detailing what the revaluation may post.

    Produce accounting adjustments

    Select this to post the revaluation of the transactions to the nominal ledger. This also prints the report detailing these postings.
  4. Click OK to begin the revaluation process.
See also

Other tasks

Foreign bank revaluation

Reference

Foreign currency transactions

Go to top