Revalue - Realized Gain

Hi,

Since realized gains/losses occur when the transaction is fully settled, why 
would we ever calculate a relaized gain through the revalue instead iof 
calculating it as unrealized and reversing it the next month?

thx,
Doug
-- 
Doug Wilson
Flagstone RE
Business Analyst - Dynamics GP
0
Doug4515 (774)
5/9/2008 2:51:00 PM
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Revaluation is used if, and only if, you have foreign currency transactions 
(i.e.Conversion of foreign currency transactions). Revaluation uses the Rates 
Table. The Revaluation Rate is simply 1/Period End Rate.

The Revaluation Process:

1.)Finds accounts within the range of accounts specified that have all or a 
portion of their balance derived from foreign currency transactions;

2.)takes the foreign currency portion of the account balance and revalues it 
using the Revaluation Rate from the Rates Table;

3.)figures the difference between the current cumulative functional balance 
of these foreign transactions and the revalued functional currency balance 
calculated using the Revaluation Rate;

4.) creates an unposted journal batch to adjust the account balance to the 
new revalued balance calculated using the Revaluation Rate. The offsetting 
account is an Unrealized Gain/Loss account specified when running the 
Revaluation process.

Don’t be confused by the fact that the Revaluation process revalues 
transactions entered using Daily Rates with rates from the Excahnge Rate 
table; the rate it is using is simply the “Daily Rate” on the last day of the 
month stored in the Exchange Rate Table.

The purposes of Revaluation is to “true-up” liability or asset accounts that 
may be materially understated or overstated at month-end using an exchange 
rate at month- end. This understatement or overstatement is caused by an 
unacceptable fluctuation in the exchange rate between the time the 
transaction was entered into and the period of interest for reporting, 
usually at a month-end. Revaluation is only necessary while the obligation 
remains unsettled (example ..the invoice is still unpaid or the receivable 
uncollected). The Realized Gain/Loss will be recorded at the time the 
obligation is settled.

Take a note revaluation can be done on any account, but typically,this is 
done for balance sheet accounts, whose balance is made up of open
transactions (ie. Accounts Payable, Accounts Receivable).

Revaluation is typically done for reporting purposes only; therefore, the 
journal entries produced as a result should be reversed in the following 
period.

Although Revaluation is intended to be used when transacting in currencies 
because of fluctuating Forex rate in the unstable economies, more and more 
company who is operating in Multi national environment , normally using this 
functionality by creating Journal Entries to reconcile their foreign 
subsidiary intercompany account.

The idea being that they are getting translated balances from their 
subsidiaries that do not balance to their inter company due to using 
different rates throughout the month to record inter company transactions.

Revaluation is used to revalue all these transaction at the same rate the 
foreign subsidiary used to translate their intercompany balance.

Hope this helps,
-- 
MG.-
Mariano Gomez, MIS, MCP, PMP
Maximum Global Business, LLC
http://www.maximumglobalbusiness.com


"Doug" wrote:

> Hi,
> 
> Since realized gains/losses occur when the transaction is fully settled, why 
> would we ever calculate a relaized gain through the revalue instead iof 
> calculating it as unrealized and reversing it the next month?
> 
> thx,
> Doug
> -- 
> Doug Wilson
> Flagstone RE
> Business Analyst - Dynamics GP
0
MarianoGomez (3441)
5/9/2008 3:09:03 PM
Thanks Mariano,

If I read Doug's question correctly he's asking why the revaluation routine 
would ever be used for 'realized' gains & losses since the system does it 
automatically when the account is fully settled.

Leslie

"Mariano Gomez" wrote:

> Revaluation is used if, and only if, you have foreign currency transactions 
> (i.e.Conversion of foreign currency transactions). Revaluation uses the Rates 
> Table. The Revaluation Rate is simply 1/Period End Rate.
> 
> The Revaluation Process:
> 
> 1.)Finds accounts within the range of accounts specified that have all or a 
> portion of their balance derived from foreign currency transactions;
> 
> 2.)takes the foreign currency portion of the account balance and revalues it 
> using the Revaluation Rate from the Rates Table;
> 
> 3.)figures the difference between the current cumulative functional balance 
> of these foreign transactions and the revalued functional currency balance 
> calculated using the Revaluation Rate;
> 
> 4.) creates an unposted journal batch to adjust the account balance to the 
> new revalued balance calculated using the Revaluation Rate. The offsetting 
> account is an Unrealized Gain/Loss account specified when running the 
> Revaluation process.
> 
> Don’t be confused by the fact that the Revaluation process revalues 
> transactions entered using Daily Rates with rates from the Excahnge Rate 
> table; the rate it is using is simply the “Daily Rate” on the last day of the 
> month stored in the Exchange Rate Table.
> 
> The purposes of Revaluation is to “true-up” liability or asset accounts that 
> may be materially understated or overstated at month-end using an exchange 
> rate at month- end. This understatement or overstatement is caused by an 
> unacceptable fluctuation in the exchange rate between the time the 
> transaction was entered into and the period of interest for reporting, 
> usually at a month-end. Revaluation is only necessary while the obligation 
> remains unsettled (example ..the invoice is still unpaid or the receivable 
> uncollected). The Realized Gain/Loss will be recorded at the time the 
> obligation is settled.
> 
> Take a note revaluation can be done on any account, but typically,this is 
> done for balance sheet accounts, whose balance is made up of open
> transactions (ie. Accounts Payable, Accounts Receivable).
> 
> Revaluation is typically done for reporting purposes only; therefore, the 
> journal entries produced as a result should be reversed in the following 
> period.
> 
> Although Revaluation is intended to be used when transacting in currencies 
> because of fluctuating Forex rate in the unstable economies, more and more 
> company who is operating in Multi national environment , normally using this 
> functionality by creating Journal Entries to reconcile their foreign 
> subsidiary intercompany account.
> 
> The idea being that they are getting translated balances from their 
> subsidiaries that do not balance to their inter company due to using 
> different rates throughout the month to record inter company transactions.
> 
> Revaluation is used to revalue all these transaction at the same rate the 
> foreign subsidiary used to translate their intercompany balance.
> 
> Hope this helps,
> -- 
> MG.-
> Mariano Gomez, MIS, MCP, PMP
> Maximum Global Business, LLC
> http://www.maximumglobalbusiness.com
> 
> 
> "Doug" wrote:
> 
> > Hi,
> > 
> > Since realized gains/losses occur when the transaction is fully settled, why 
> > would we ever calculate a relaized gain through the revalue instead iof 
> > calculating it as unrealized and reversing it the next month?
> > 
> > thx,
> > Doug
> > -- 
> > Doug Wilson
> > Flagstone RE
> > Business Analyst - Dynamics GP
0
LeslieVail (702)
5/12/2008 1:48:01 PM
Leslie,

I believed I explained in enough detail below. However, Revaluation is only 
needed when the obligations REMAIN UNSETTLED and it is used for reporting 
purposes ONLY to precisely avoid understating or overstating such obligations 
on your balance sheet (and in the case of your expenses, on your P&L). When 
revaluation is executed, the system will calculate a REALIZED GAIN/LOSS, 
hence why you will need to reverse out in the next period.

And no, you cannot book an unrealized gain/loss in one month then reverse it 
in the other. It is not GAAP or FASB compliant, hence why you run revaluation 
to begin with.

Hope this helps,
-- 
MG.-
Mariano Gomez, MIS, MCP, PMP
Maximum Global Business, LLC
http://www.maximumglobalbusiness.com


"Leslie Vail" wrote:

> Thanks Mariano,
> 
> If I read Doug's question correctly he's asking why the revaluation routine 
> would ever be used for 'realized' gains & losses since the system does it 
> automatically when the account is fully settled.
> 
> Leslie
> 
> "Mariano Gomez" wrote:
> 
> > Revaluation is used if, and only if, you have foreign currency transactions 
> > (i.e.Conversion of foreign currency transactions). Revaluation uses the Rates 
> > Table. The Revaluation Rate is simply 1/Period End Rate.
> > 
> > The Revaluation Process:
> > 
> > 1.)Finds accounts within the range of accounts specified that have all or a 
> > portion of their balance derived from foreign currency transactions;
> > 
> > 2.)takes the foreign currency portion of the account balance and revalues it 
> > using the Revaluation Rate from the Rates Table;
> > 
> > 3.)figures the difference between the current cumulative functional balance 
> > of these foreign transactions and the revalued functional currency balance 
> > calculated using the Revaluation Rate;
> > 
> > 4.) creates an unposted journal batch to adjust the account balance to the 
> > new revalued balance calculated using the Revaluation Rate. The offsetting 
> > account is an Unrealized Gain/Loss account specified when running the 
> > Revaluation process.
> > 
> > Don’t be confused by the fact that the Revaluation process revalues 
> > transactions entered using Daily Rates with rates from the Excahnge Rate 
> > table; the rate it is using is simply the “Daily Rate” on the last day of the 
> > month stored in the Exchange Rate Table.
> > 
> > The purposes of Revaluation is to “true-up” liability or asset accounts that 
> > may be materially understated or overstated at month-end using an exchange 
> > rate at month- end. This understatement or overstatement is caused by an 
> > unacceptable fluctuation in the exchange rate between the time the 
> > transaction was entered into and the period of interest for reporting, 
> > usually at a month-end. Revaluation is only necessary while the obligation 
> > remains unsettled (example ..the invoice is still unpaid or the receivable 
> > uncollected). The Realized Gain/Loss will be recorded at the time the 
> > obligation is settled.
> > 
> > Take a note revaluation can be done on any account, but typically,this is 
> > done for balance sheet accounts, whose balance is made up of open
> > transactions (ie. Accounts Payable, Accounts Receivable).
> > 
> > Revaluation is typically done for reporting purposes only; therefore, the 
> > journal entries produced as a result should be reversed in the following 
> > period.
> > 
> > Although Revaluation is intended to be used when transacting in currencies 
> > because of fluctuating Forex rate in the unstable economies, more and more 
> > company who is operating in Multi national environment , normally using this 
> > functionality by creating Journal Entries to reconcile their foreign 
> > subsidiary intercompany account.
> > 
> > The idea being that they are getting translated balances from their 
> > subsidiaries that do not balance to their inter company due to using 
> > different rates throughout the month to record inter company transactions.
> > 
> > Revaluation is used to revalue all these transaction at the same rate the 
> > foreign subsidiary used to translate their intercompany balance.
> > 
> > Hope this helps,
> > -- 
> > MG.-
> > Mariano Gomez, MIS, MCP, PMP
> > Maximum Global Business, LLC
> > http://www.maximumglobalbusiness.com
> > 
> > 
> > "Doug" wrote:
> > 
> > > Hi,
> > > 
> > > Since realized gains/losses occur when the transaction is fully settled, why 
> > > would we ever calculate a relaized gain through the revalue instead iof 
> > > calculating it as unrealized and reversing it the next month?
> > > 
> > > thx,
> > > Doug
> > > -- 
> > > Doug Wilson
> > > Flagstone RE
> > > Business Analyst - Dynamics GP
0
MarianoGomez (3441)
5/13/2008 12:41:01 AM
Reply:

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