About Revaluing Multicurrency Transactions

When exchange rates fluctuate, you may need to revalue outstanding documents denominated in other currencies to reflect their present value in your own (functional) currency at a particular time, for example, at financial statement dates. When you revalue a transaction, Accounts Payable recalculates its functional equivalent value at a new exchange rate.

Some accounting standard-setting bodies require that you take gains or losses due to fluctuating exchange rates into income (recognized) in the period in which they occur.

In Sage 300 ERP, exchange gains and losses are treated as permanent or temporary, depending on the exchange Gain/Loss Accounting Method specified for your Sage 300 ERP system (in the company profile):

• Recognized Gain or Loss. If you use this accounting method, revaluation transactions are considered permanent. In this accounting treatment, they are recognized immediately when you post them, and they are not reversed in the next period.
• Realized and Unrealized Gain/Loss. If you use this accounting method, revaluation transactions are considered temporary, or unrealized, gains and losses. Therefore, they are posted to General Ledger as reversing transactions, meaning that General Ledger simultaneously posts reversing transactions to the first day of the next fiscal period following the revalued period. In this way, revaluation has no permanent effect on the general ledger.

  Under this method, realized exchange gains or losses are calculated only when you post payments to pay invoices and debit notes, or when you post credit notes to pay down invoices.

Note: Rounding differences may occur during revaluation. These exchange differences are automatically posted to the exchange rounding account when payments are posted.

You do not post revaluation batches in Accounts Payable. If you do not have Sage 300 ERP General Ledger in your company database, Accounts Payable creates an export batch for your general ledger. If you import a revaluation batch into another general ledger, make sure that the revaluation transactions are reversed in the next fiscal period.

Revaluing Periods that Contain Backdated Documents

Sage 300 ERP lets you post a multicurrency document that predates the last revaluation for the document currency, and it lets you apply the backdated document. An exchange gain or loss can arise.

The accounting method you use to record exchange gains and losses in your Sage 300 ERP system determines how the revaluation process handles backdated documents:

• Realized and Unrealized Gain/Loss. If you use this accounting method, you can revalue the backdated document by running the Revaluation program again for the period to which you posted the document (process a backdated revaluation). For this accounting method, if you rerun revaluation for a period that contains a backdated document, you must also rerun all subsequent revaluations.

• Recognized Gain or Loss. If you use this accounting method, you can let the program automatically correct any exchange gains or losses for backdated documents and the documents to which they are applied.

  To automatically correct these exchange gains or losses, enter or accept a date in the Earliest Backdated Activity Date field on the Revaluation screen.

  You can also choose to ignore the backdated document, for example, if it is not material or if you posted it to a period that does not coincide with the end of a reporting period. If you do not want the program to revalue backdated documents and activity when you perform a backdated revaluation, leave the Earliest Backdated Activity Date field blank on the Revaluation screen.

  The program adjusts exchange gains and losses for backdated documents and documents affected by backdated activity as of the balance sheet dates:

  • If the current revaluation date is on or after the last revaluation date and there is a backdated document (or a document affected by backdated activity), the program revalues the document and creates adjustments as of the current revaluation date. (The Earliest Backdated Activity Date field does not appear.)

  • If the current revaluation date predates the last revaluation date and you are revaluing a backdated document or a document affected by backdated activity, Revaluation:

    • Creates entries to recognize exchange gains or losses for backdated documents as of each revaluation date from the earliest backdated activity date to the last revaluation date.
    • Ignores any backdated documents with posting dates before the Earliest Backdated Activity Date.

  • If the revaluation occurs between the document date and settlement date, and the revaluation rate is different from the current rate for the settlement document, Revaluation creates adjustments to:

    • Update the document’s functional balance (including discount and retainage balances) for the revalued period.
    • Correct any exchange gains and losses recognized at the time of settlement for the period from the revaluation date to the settlement date.

Revaluing Documents with a Multiple Payment Schedule

If you use the Recognized Gain/Loss accounting method, when you revalue a document that uses a multiple payment schedule, Revaluation revalues each portion of the invoice that is due and applies the sum of the net gains (or losses) to the document.

Revaluing Outstanding Retainage

If you use multicurrency, when you run Revaluation, the program also revalues amounts outstanding in the retainage control account.

For revalued outstanding retainage, the program creates general ledger entries to adjust the retainage control account rather than the payables control account.

If your Sage 300 ERP system uses the Realized and Unrealized Gain/Loss accounting method to revalue multicurrency documents, the program also creates reversing entries for the next period. (You set the revaluation accounting method in the Company Profile, in Common Services.)

The Revaluation Posting Journal includes a separate section for retainage, following the current revaluation of documents for each vendor.

If you include job‑related details on the posting journal, a retainage section appears on the Summary page after the current job details.

Unrealized Gains and Losses

If your Sage 300 ERP system uses the Realized and Unrealized Gain/Loss method to revalue multicurrency amounts, Accounts Payable calculates unrealized exchange gains or losses as follows:

Source amount x Revaluation rate

Less:

Functional amount

Equals

Unrealized gain (loss)

The revaluation transaction is reported on the Vendor Transactions report for the vendor as type GL.

When you post the revaluation batch in General Ledger, the program also posts a reversing entry to the first day of the next fiscal period:

When you print the Vendor Transactions report for the period in which you post the reversing revaluation transaction, both transactions appear for the vendor. Their net effect on the account balance is zero.

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