How Income Statement Accounts Are Revalued
Revaluation is the process which adjusts asset or liability accounts that may be materially understated or overstated. The fluctuation in the conversion rate occurs between the time the transaction was entered and the time revaluation takes place.
You may want to revalue income statement accounts as well. The Income Statement Accounts Rule indicates whether period-to-date (PTD) or year-to-date (YTD) method is to be used when revaluing income statement accounts.
Click the Income Statement radio buttons on the Create Revaluation page to revalue income statement accounts using PTD or YTD balances.
If you select to revalue PTD balances for income statement accounts, the process continues to appropriately revalue YTD balances for balance sheet accounts. If the range of accounts consists of both income statement and balance sheet accounts and you select PTD as an option for income statement account revaluation rule, the revaluation:
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Creates separate revaluation journal for the income statement accounts
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Creates weighted average YTD balances using period rates from each corresponding period against the PTD account balance.
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Is in compliance with the Statement of Financial Accounting Standards No. 52, Foreign Currency Translation.
When you run revaluation on your income statement accounts, the process produces two separate journal entries; one that revalues your balance sheet accounts and another for your income statement accounts. You don't reverse the PTD revaluation journal for your income statement accounts in the subsequent period. The revaluation only applies to last period's activity.