Revaluing Balances

You can revalue balance sheet accounts that are denominated in a foreign
currency in accordance with SFAS 52 (U.S.). Revaluation reflects changes in
conversion rates between the date of journal entry and the date of
receipt/payment of the foreign currency amount. General Ledger posts the
change in converted balances against the unrealized gain/loss account you
specify. You can revalue a single account or ranges of accounts.

When you run revaluation, General Ledger creates a revaluation batch containing a
separate journal entry for each revalued foreign currency. Note that General Ledger
creates the revaluation adjustments in your functional currency. General Ledger
automatically defines the reversal period as the next accounting period.

When you revalue balances in an average balance set of books, General Ledger
only revalues standard balances. When you post the revaluation journal entries to
update your standard balances, the system will recompute your average balances
automatically.

Additional Information: If you use Multiple Reporting Currencies, you must run
revaluation in your primary set of books and in each of your reporting sets of
books.

Prerequisites

Define an unrealized gain/loss account.

Define a revaluation rate for each currency for each period for
which you want to run revaluation.

To revalue your account balances:

1. Navigate to the Revalue Balances window.

Note: As you complete the remaining steps, note that the Revalue Balances
window may display various warning messages, depending on the selections you
make, especially if either the currency you are revaluing or your functional
currency has a currency derivation of Euro, EMU, or Interim EMU (see: Currency
Derivations). If you receive a warning, review your entries carefully to make sure
they are correct.

2. Enter the accounting Period for the balances you want to revalue.
 3. If you have average balance processing enabled, enter an Effective Date
for the revaluation journal entries that General Ledger will create. If you do
not enter an effective date, General Ledger will use the nearest business
day in the Period you chose.

Additional Information: If you enter an invalid effective date, based on the

Effective Date Rules you've defined for your Revaluation journal source, General
Ledger will automatically adjust the effective date to one that is valid.
See: Effective Date Validation.

4. Enter the Unrealized Gain/Loss Account to record net gains and losses
from the revaluation. The default is the gain/loss account you entered for
the previous revaluation.

5. Choose one of the following Currency Options:

Single Currency: to revalue a particular foreign currency.

EURO+EMU: to revalue all currencies whose currency derivation is Euro,

EMU, and Interim EMU.

All Currencies: to revalue all foreign currencies.

6. If you choose to revalue a single currency, enter the Currency to use for
the revaluation. If your set of book's functional currency has a currency
derivation of Other, you can only enter a currency that also has a currency
derivation of Other.

If you choose to revalue all currencies, General Ledger revalues each

foreign currency balance only if a period-end rate exists for that currency
and accounting period.

Note: You must define a period-end rate for your selected accounting period and
currency before you can run revaluation.

7. If you choose to revalue a single currency, you may need to enter the
Rate to use for the revaluation, depending on whether your set of book's
functional currency has a currency derivation of Other, EURO, EMU, or
Interim EMU:
 Other: General Ledger automatically displays the revaluation rate you
defined for this accounting period and currency. You can use this default
rate, or enter a different Rate.

Euro, EMU, or Interim EMU: General Ledger automatically displays a

different rate, depending on the currency derivation of the currency you
choose to revalue:

o Euro, EMU, or Interim EMU: General Ledger displays the fixed

conversion rate. You cannot change this rate.

o Other: General Ledger displays the revaluation rate for the period
and currency. You can use this default rate, or enter a different Rate.

8. Enter an Account Low and High to revalue accounts that fall within that
range. Repeat this step to enter multiple ranges.
9. Choose Revalue. General Ledger launches a concurrent process to
revalue your account balances. The process names your revaluation batch
in the following format: Revalues <Period Name> <Concurrent Request
Date> <Concurrent Request Time>; for example, Revalues JAN-95 31-JAN-
95 15:34:00.

See: Summary of Revaluation Program Action

10. Use the Revaluation Execution Report to review the status of your
account revaluation. General Ledger automatically generates this report
when you run revaluation.

11. Post the revaluation journal batch.

Note: If you use Multiple Reporting Currencies and post a revaluation batch in
your primary set of books, General Ledger does not create a converted journal in
your reporting sets of books as it does for other journals.

Summary of Revaluation Program Action

The following table summarizes what the revaluation program does, depending
on your functional currency's currency derivation and the currency option you
choose from the Revaluation window.
 Currency Derivation of Functional Currency

Currency
Other Euro or EMU Interim EMU
Option

Single Revalues standard Revalues standard balances Revalues standard balances

Currency balances denominated denominated in the selected
in the selected currency for the selected
currency for the period and range of accounts.
selected period and Currencies whose currency
range of accounts. derivation is Other are revalued
Currencies revalued using the rate for the currency
using the specified and period. Currencies whose
rate. currency derivation is Euro,
EMU, and Interim EMU are
revalued using the fixed
conversion rate.
denominated in the
selected currency for the
selected period and range
of accounts.
Currencies whose currency
derivation is Other are
revalued using the rate for
the currency and period.
Currencies whose currency
derivation is Euro, EMU,
and Interim EMU are
revalued using the fixed
conversion rate.

EURO+EMU Revalues standard Revalues standard balances Revalues standard balances

balances denominated
in a currency whose
currency derivation is
Euro, EMU, or Interim
EMU, for the selected
period and range of
accounts.
Currencies are revalued
using the rate for the
currency and period.
denominated in a currency
whose currency derivation is
Euro, EMU, or Interim EMU, for
the selected period and range
of accounts.
Currencies revalued using the
fixed conversion rate.
denominated in a currency
whose currency derivation
is Euro, EMU, or Interim
EMU, for the selected
period and range of
accounts.
Currencies revalued using
the fixed conversion rate.

All Revalues all standard Revalues all standard balances Revalues all standard
Currencies balances denominated denominated in a currency balances denominated in a
in a currency other whose currency derivation is currency other than your
than your functional not Euro or EMU, for the functional currency, for the
currency, for the selected period and range of selected period and range
selected period and accounts. of accounts.
range of accounts. Currencies whose currency Currencies are revalued
Currencies are revalued derivation is Other are revalued using the rate for the
using the rate for the using the rate for the currency currency and period.
currency and period. and period. Currencies whose
currency derivation is Euro or
 EMU are not revalued.
Currencies whose currency
derivation is Interim EMU are
revalued using the fixed
conversion rate.

Table 1 - 27. (Page 1 of 1) Summary of Revaluation Program Action

Revaluation - when ,what & why?

Revaluation is used if, and only if, you have foreign currency transactions
(i.e.Conversion of foreign currency transactions). Revaluation uses the Period 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 Period 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 Period Rate table; the rate it is using is simply the "Daily Rate" on
the last day of the month stored in the Period 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.

How to specifying PTD or YTD Revaluation

We can use the setting in the profile option 'GL: Income Statement Accounts Revaluation Rule'.

The following values are available:

PTD: Only PTD balances will be revalued for income statement accounts.

When you select PTD, the Revaluation program only revalues the PTD balances of your income
statement accounts but continues to revalue YTD balances for balance sheet accounts.

YTD: Only YTD balances will be revalued for income statement accounts.
When you select YTD, then the revaluation program behaves as it did before, revaluing YTD
balances for both your income statement and
balance sheet accounts.

Revaluation Adjustments Involving Period Rates

In Release 11i, revaluation adjustments could be calculated using period rates, daily
rates of a specified rate type, or user-entered rates specified at run time for the
revaluation request. Revaluation sets were specific to a set of books.

For the Release 12 upgrade, set of books-specific period rates are merged into the daily
rates model, identifiable by unique period-end and period-average rate types. Under
this new model, revaluation adjustments are calculated with the option of either using
daily rates of a specified rate type or one-time, user-entered rates specified for the
revaluation; the period rates option has now been removed from the user interface. It is
also now possible to share revaluation sets across ledgers that share a common chart of
accounts.

The upgrade process merges the period rates with the daily rates model by assigning
system-generated period-end and period-average rate types to sets of books when
converting them to ledgers. Existing revaluation sets that were assigned the period rates
option are modified to use the daily rates type option. The rate type assigned to each
revaluation set corresponds to the system-generated, period-end, rate type assigned to
the upgraded ledger.
Revaluation Sets Involving Secondary Segment Tracking

In Release 11i, revaluation sets were specific to the set of books. It was possible to have
gain/loss templates correspond to the setting for the secondary segment tracking
revaluation option on the set of books. Alternatively, the templates could also
correspond to the profile option that controlled cost center tracking. For example, if
secondary segment tracking was enabled for the set of books, the secondary tracking
segment in the gain/loss account templates would be filled in dynamically by the
revaluation program and could not be updated by the user. The balancing segment was
always non-updateable for the templates because this was dynamically determined in
all situations.

In Release 12, it is now possible to share revaluation sets across ledgers that share a
common chart of accounts. These ledgers may have different settings for secondary
segment tracking or for the cost center tracking profile option. The gain/loss account
templates for revaluation sets have been updated to only have a non-updateable field
for the balancing segment; all other segments require a segment value. This makes the
revaluation set equally usable for all ledgers regardless of how they track revaluation.

During the upgrade, revaluation sets will keep the same gain/loss account templates as
originally defined. Where there are non-balancing segments that are missing an account
value in the templates, it is not possible for the system to assign appropriate account
values.
In Release 12, however, the system requires all segments, except the balancing
segment, in the templates to contain values, so users will need to enter values for these
segments prior to running revaluations with the upgraded templates.

The non-balancing segments that require attention applies to users who satisfy the
following conditions:

• Users have multiple sets of books in Release 11i.

• The sets of books share the same chart of accounts.
• The sets of books are configured with different settings for the revaluation option
for secondary segment tracking.
• Users want to run revaluation for upgraded sets of books that did not have the
secondary segment tracking enabled for revaluation in Release 11i.

Revaluation
Asim Nabi asked Apr 18, 2010 | Replies (5)

Lets say on 10-JAN-10, I entered a EUR invoice in the system. The functional currency is USD.
The exchange rate is 1.5. On 31-JAN-10 the exchange rate is 1.6. I ran the revaluation for
Accounts Payables GL account so that exchange/rate gains loss is calculated. Once revaluation
entries are generated and posted, my Income Statement would display true picture. I paid the
invoice on 15-FEB-10. The exchange rate is 1.7.
 My question is that, final exchange rate gain/loss is also calculated when you pay an invoice.
Wouldn't this calculation conflict with the intermediate gain/loss calculation of revaluation that
was run on 31-JAN-10?

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5 Replies

Hussein Bakri replied Jan 1, 0001

Dear Asim, Be careful on this topic, you need to see the taxation rules in the province you are
implementing the solution. If I remember in certain cases there are some regulations that force
you to identify the gain or loss once and you cannot keep re-evaluating the gain or loss from
exchange at the end of each period My recommendation would be to do it on the same time
interval he issues his financial papers let us say quarterly or semi annually, this will minimize the
number of transactions and reduces the special cases

Regards,

Hussein

Deepak Kothari replied Jan 1, 0001

Hi Asim,

The difference can ne easily identified with the accounts used, in

Revaluation Unrealized Gain and Unrealized Loss accounts will be affected,
however in the Payables Payments Realized Gain and Realized Loss accounts
will be affected with a currency exchange rates.
*Revaluation*

Revaluation is to revalue your assets and Liabilities on a particular date.

It has nothing to do with the Actual Payment and receipt of money on
whatsoever exchange rate.

This just to show the actual position of your assets and liabilities on the
Balance sheet/ Trail Balance. All debit revaluation adjustments are offset
against the *unrealized gain* account and all credit adjustments are offset
against the *unrealized loss* account. If the same account is specified in
both fields, the net of the revaluation adjustments is derived.

*Payables Payments*

*Realized Gain/Loss Accounts:- * Payables uses these accounts as the default

realized gain and loss accounts for payments from each of your bank
accounts. If the exchange rate changes between invoice entry and payment,
Payables automatically calculates the realized gain or loss and records it
in this account. Payables records gains and losses only if you use accrual
basis accounting. The Account for Gain/Loss Payables option controls when
Payables accounts for gains and losses.

Hope this helps,

Deepak Kothari

0
 ahmed fazary replied Apr 19, 2010

Hi Asim,
Actually the Revaluation entry generated from the revaluation process adviced by oracle to be
reversed in the next period since its unrealized loss/gain,the Revaluation process as you
mentioned is only to generate my financial statments at the current exchange rate,the actual
gain/loss will be reflected at payment or receipt date.

Regards,
Ahmed

Asim Nabi replied Apr 20, 2010

Ahmed, Thank you very much. That solves the problem. If revaluation entries are reversed then
they will not conflict with final exchange rate gains and losses entry produced by the payment.

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carl.evans replied Apr 21, 2010

February GL Revaluation of the debit to Accounts Payable for payment effectively reverses
January GL revaluation of the credit for the invoice. Think of Revaluation as an unrealized
estimate, at each period end, of realized gain or loss when the invoice is paid. There is no need
for a separate journal to reverse revaluation each month. However, the result will be the same so
there is no harm other than an unnecessary reversal process and journal. The result is the same
with a reversal entry since the reversal entry also is revaluated in February.