Setting Up Revaluation

To enable accounts to be revalued, you must configure currencies and revaluation parameters on the accounts, and then create a posting structure for revaluation postings.

Typically, two or three accounts are involved in revaluation: the source account, target account, and revaluation account.

• The source account is the original GL account to which the transaction affected by revaluation was posted.

• The system account is the account that contains the exchange rate differences produced by the revaluation.

• The revaluation account is the account into which the revaluation results are posted—that is, the profit or loss.

Note: Only the system account and the revaluation account (for sub-ledger accounts) are used in the posting. However, for standard GL accounts, the source and revaluation accounts are the same, and the source account is also used in the posting.

Sub-ledger accounts require a separate target account for revaluation. The target account in these cases is a separate standard GL account, in which you post the exchange rate differences. These separate accounts are then reconciled to the general ledger.

For all account types, the unrealized loss or gain must be posted to one of the following accounts:

You can define only one of each type of account at a shared set level. You can also configure only one set of revaluation accounts at shared set level. The system uses the same set of accounts for both transaction currency and statutory currency revaluation. See System Accounts for details on creating unrealized and realized loss/gain accounts.

However, for particular GL accounts, you can specify alternative unrealized exchange loss and unrealized gain accounts in GL Account Create. These GL accounts allow unrealized gains or losses to be posted to different parts of the COA depending on the nature of the transaction. These GL accounts overrule the system unrealized accounts and are used during revaluation to post the unrealized gain and loss.

When you define these GL accounts with SAF analysis and you post revaluations, the system retrieves SAF details from the source transactions and balances and posts the same SAF details to the Unrealized Gain and Loss accounts. When the unrealized gain or unrealized loss GL account has the same SAF concept as the source GL account, the system retrieves the SAF value of that concept from the source GL account. Otherwise, the system uses the default SAF value of the Unrealized Gain or Loss GL account.

When the source GL account has a revaluation GL account defined and the revaluation GL account is defined with SAF analysis, when you post revaluations, the system retrieves SAF details from the source transactions and balances. It then posts these SAF details to the Revaluation GL account. If the Revaluation GL account has the same SAF concept as the source GL account, the system retrieves the SAF value of that concept from the source GL account. Otherwise, the system uses the default SAF value of the Revaluation GL account.