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.
Dynamics GP- Latest Links
Rubal, Great article. You can also take a look at these articles I had posted on revaluation series.
http://msdynamicstips.com/2010/05/15/multicurrency-revaluation-series-part-i-revaluation-setup/
http://msdynamicstips.com/2010/05/15/multicurrency-revaluation-series-part-ii-revaluation-process-logic/
http://msdynamicstips.com/2010/05/15/multicurrency-revaluation-series-part-iii-summary-balance-checks-and-reconciliation/
http://msdynamicstips.com/2011/05/03/table-structure-definitions-multicurrency-account-master/
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?
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/
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
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.
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
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
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.