Scenario :
How to handle bank currency revaluation? Let’s say I have an overseas bank account and I want to adjust the local currency amount according to the currency of the month so that the balance sheet bank account will be up-to-date.
Solution:
- First of all, Advance Currency Module is a chargeable module. Ensure you purchase Advance Currency Module.
In Module Manager, this module is ticked so that the function is available - In General Ledger> Chart of Accounts > Under Expenses
Create an account for “UNREALISED FOREX LOSS (GL)”. - In General Ledger > Chart of Accounts > Under Other income, create an account for “UNREALISED FOREX GAIN (GL).
- Maintenance > Default Interface Accounts > Update “Unrealised forex gain GL” and “Unrealised forex loss GL”. So that system will post to these 2 accounts if the currency revaluation is proceed
- Maintenance > Currencies, setup the foreign currency, we are using USD as sample. Set a default rate, sample here is 4.0
- You can now create an overseas bank account
General Ledger > Chart of Accounts > Under Current Assets > Cash At Bank, create an overseas bank account. Example CIMB BANK (USD) > set Currency as USD, tick “Revaluation Required” (Important to tick this setting) - Let’s create some transactions for Receive and Payment for this overseas bank account. For example we received USD 10,000 on 1/8/2021, the rate is 4.1 Select Bank account as CIMB Bank USD
- If you click on the double-entry, the system posts as local currency
- Continue to create another entry for payment. Create a Payment Voucher, select as CIMB BANK (USD) at 23/8/2021 > rate as 4.1 System will post local currency as well
- Let’s say the user would like to revaluate the bank account on September, then you need to setup the currency rate for September. Maintenance > Currencies > under Currency Rate by Periods > Click New
Setup rate for September. Example we set 4.01 for currency rate - To proceed currency revaluation, go to Advance Currency Module > Auto Revaluation – GL
Setup the Date, and select the bank account to revaluate - Click Generate > System will generate a record after revaluation
F.Currency = The oversea bank balance in the system (In Foreign Currency amount)
Currency Rate = The currency rate
L.Currency = Local Currency amount before currency revaluation (F.Currency X Currency Rate)
Revaluate Rate = The rate we set at Currencies maintenance for September
After Rev = Local Currency amount after currency revaluation (F.Currency X Revaluate Rate)
Adjustment = The amount to adjust (It will post to Unrealised Gain or Loss account)
* Note: Posting account based on setting in Default Interface Account - Save it then Preview this report
- System display result as below
- You can view the other report under Advance Currency > GL Multi Currency Report
Filter the Date as you want, and choose the account for the overseas bank account - Preview Format SR 01 – Currency Revaluation General Ledger
- Preview Format SR 03 - Currency Revaluation General Ledger (Multi-Currency)
- Go to Journal Entries > System posted currency revaluation adjustment accordingly
- End -
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You might want to check out this article "Revalution" please refer https://en.wikipedia.org/wiki/Revaluation