Revaluations

Currency Translator translates only the first time period and time periods with value changes, and calculates others. This avoids revaluations and provides accurate results without requiring a blended exchange rate of all equity components.

For example, consider these values in American dollars:

Year	Dollars	Rate of Exchange
Common Stock in 2003	100	exchange rate: 3
Common Stock issued in 2004	50	exchange rate: 4
Common Stock in 2004	150	exchange rate: 3

If you use the standard method to translate American dollars to the German deutschmark, these values result:

Common Stock in 2003	300	translated at 3
Commons Stock issued in 2004	200	translated at 4
Common Stock in 2004	450	translated at 3
Revaluation of Stock	-50

The translations should be:

Equity—from 100 to 300
Issuance—from 50 to 200

The total should be 500, but the translation is 450—a -50 revaluation difference. This error occurs when calculating every time period, regardless of change.

To avoid this error, Currency Translator translates the equity of the first period at the equity historical rate, and translates subsequent periods only if the value changes. Otherwise, they use the first period's value. The values are correct:

Table 11. Currency translation

Common Stock in 2003	300	translated at 3
Common Stock issued in 2004	200	translated at 4
Common Stock in 2004	500	calculated
Revaluation of Stock	0

See Avoiding Revaluation in Equity Accounts.