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Digging deep into Multicurrency Revaluation

In this post, I am going to explain the MultiCurrency Revaluation feature in GP. This is used to calculate the Realized and Unrealized gain/loss based  exchange rates

Setup  accounts for the Realized and Unrealized Gain/Loss:
1.       Turn on the revalue for the accounts

2.       Enter the posting accounts for Realized and Unrealized gain/loss

1.       Revaluation option must turned on  for accounts which you want to revalue.

Open Cards >> Financial >> Account Currencies

Check on Revalue account and currencies and save changes

In above window, you can turn on revalue account for one account at a time.

To mass update accounts use Multicurrency Mass Account Update window  from Cards >> Financial >> Currency Account Update

Restrict the accounts by inserting the segment values

Check on the Update currencies and update Revalue Option

Click update to Update accounts


2.       Enter the posting accounts for Realized and Unrealized Gain/Loss

Open Microsoft Dynamics GP menu >> Tools >> Setup >> Posting >> Posting Accounts window

Enter the default accounts for revaluation

These account will be used  for revaluation of all currencies.

If you want to setup different accounts for different  currencies use Multicurrency Posting Account Setup window from Microsoft Dynamics GP menu >> Tools >> Setup >> Financial >> Currency Accounts.

Select the currency and enter the accounts

 

Revalue currency values:

Open Multicurrency Revaluation window from Microsoft Dynamics GP menu >> Tools >> Routines >> Financial >> Revaluation

Enter the Revalue Option.

Select whether you want to post transaction or view report only

Select Realized or Unrealized.

Unrealized

Mark Unrealized to calculate unrealized gains/losses during revaluation. You will have the option to reverse the posting.

Realized

Mark Realized to calculate realized gains/losses during revaluation. You will not have the option to reverse the posting.

Depending upon the option selected, Reversing date field is enabled or disabled

 

Select the currency and enter the exchange rate

You can restrict the accounts for which you want to revalue restrictions Button

 

Click Revalue  to view the report or post the Transaction

How these values are calculated:

Lets consider account 000-1200-00.

We have run revaluation for Canadian Dollar for April 2017

Get all the transactions entered in this month for Canadian dollar

 

 

Note the total amount is C$ 519

Get the this amount in Functional currency

Gain calculated

Originating amount(C$) Exchange rate Functional Amount($) 

Originating Amt *  Exchange Rate

Gain/Loss
Before Revaluation
Trx 1 469.18 0.689905793 323.69
Trx2 50 2 100
Total 519.18 =(0.689905793+2)/2(Average Exchange rate)

=1.344952897

423.69
After Revaluation 519.18 1.23444(Exchange rate we entered for revaluation) =519.18*1.23444 

=640.8965592

=640.8965592-423.69  

=217.2066

 

Revaluation Report

 

 

Definitions

Revaluation

Revaluation is the process of recalculating the functional currency value of transactions that were recorded in a currency other than your functional currency, or of recalculating the functional currency balances for accounts that are held in a currency other than the functional currency, based on a specific exchange rate.

You can indicate whether you want to calculate unrealized gains and losses or realized gains and losses during revaluation. If you select to calculate unrealized gains and losses, you will have the option to reverse the posting. If you select to calculate realized gains and losses, you will not have the option to reverse the posting.

 

Unrealized gains and losses

An unrealized gain or loss can be calculated for a transaction that hasn’t 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 balance is calculated as if you were to convert the account’s balance to your functional currency on the revaluation date, and an unrealized gain or loss is posted. You 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 you revalue 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.

16 Responses to “Digging deep into Multicurrency Revaluation”

  1. Kris says:

    Rubal, Great post. What we are seeing is a gain/loss when applying a payables trx to an invoice for every trx not in the functional currency. we are not running the revalue tool. It is calculating the gain loss like this: $us – British lbs = gain/loss. It doesn’t make any sense. Do you have any ideas what would be casing this?

  2. Rubal says:

    Hi Kris,
    If the invoice and payment have different document dates with different exchange rates, the gain/loss amount is generated while applying the payments.
    Let say there is an invoice of 18,000.00 GBP and exchange rate for invoice date is 0.720886626. Therefore, the functional amount is calculates as 24,969.25 USD

    If payment is entered on a different date, the functional amount is calculate on based on new exchange rate
    Let’s say payment of 18,000.00 GBP and exchange rate for payment date is 0.720786626(slightly different). Therefore, the functional amount is calculated as 24,972.72 USD

    The difference between invoice’s functional amount and payment’s functional amount is the Gain/Loss= 24,969.25 -24,972.72 = (3.47)

    Thanks,
    Rubal
    http://dynamicsgphelp.com/

  3. John McCarthy says:

    Hi Rubal,
    Thanks for the informative article.
    We have an issue I am trying to resolve with GP support but it seems to be taking a while to get answers so I thought I would ask you.

    We have a client that had some MC AR transactions. Everything is now paid in full and moved to history. The problem is our HATB for AR shows a functional $ balance (Originating is $0). I have tracked it down to an amount in the MC020104 table. I would have expected when the invoice was fully applied all the Forex Gain/Loss would have been recognized and this table cleared out. Something happened with these transactions that the process didn’t clear out or update properly – I am trying to determine what to look at – and what can be ‘safely’ cleared out. Have already tried the unapply (historical AR) and re-apply and a revaluation – didn’t clear this MC020104 table – do you know what does? Thanks

  4. Kim Gelder says:

    Hi,

    Upon setup of a new company, muticurrency was set to realized when it should have been set to unrealized for our AR transactions. We are now 3 periods in and have caught the mistake. Is there anyway to undo what has been posted and fix.

  5. Rubal says:

    Hi,

    I am not sure I understand you question completely. You can try posting your question on Microsoft Dynamics Community
    https://community.dynamics.com/product/gp/f/32.aspx

    Thanks,
    Rubal

  6. Flora says:

    Hi,

    What is “Round” mean in the revaluation.

    The belowing i know is going to post into the GL, but what about “Round”??
    RZGAIN
    RZLOSS
    Unrealized Gain
    Unrealized Loss

    Hope you can help.

    Thanks alot

  7. Ahmed says:

    Hi.

    I have set up revaluation in payable management after going through your article. The realized exchain gain/loss is being calculated automatically and posted into GL properly at the time of making payments to vendor but facing one issue that realized gain/loss does not reflect into vendor ledger in payable module. Please advise if I made any mistake in setting up account.

    Best regards.

  8. Julie says:

    IS there a way to undo (void) a revaluation done by mistake?

    Thank you for your help.

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