Revaluation of Invoice with Open Payment and Historical Transaction Processing
Processing historical transactions distributes the accounting impact of transactions in the past across all accounting books. The application date of a payment can differ in your primary and secondary accounting books after running historical transaction processing. The difference in payment application dates may cause there to be currency revaluations (unrealized gain/loss) in your primary book but not in your secondary book. This may lead to discrepancies when comparing Unrealized Exchange Rate Gains/Losses reports in a specific period on your primary and secondary accounting books.
Consider the following scenario:
There is a payment and invoice created in April 2022. The payment is fully applied to the invoice in May 2022 on the primary book. In May, you add a secondary book. After adding a secondary book and running historical transaction processing, that same payment is fully applied to the invoice in April 2022 on the secondary book. The invoice and payment in the primary book are eligible for currency revaluations (unrealized gain/loss) at the end of April because there is an open balance. However, the same invoice and payment in the secondary book are not eligible for currency revaluations (unrealized gain/loss) at the end of April because the transaction is closed (no open balance).
The following example illustrates how this scenario occurs:
Primary Accounting Book Month-End Currency Revaluations
In this example, there is an invoice in British Pounds (GBP) created on April 1, 2022, in a USD-based subsidiary. There is also a payment created for that invoice on April 25, 2022. The payment has not been applied to the invoice.
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Invoice = 200 British Pounds (GBP)
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Payment = 200 British Pounds (GBP)
You are revaluing open balances for April 2022 as part of your month-end close process.
A currency revaluation (unrealized gain/loss) is created for the invoice because the payment has not been applied to the invoice. The currency revaluation transaction includes the following columns in the Details subtab under Open Receivables. Currency symbols do not appear on the Currency Revaluation (Unrealized Gain/Loss) page but are included here to distinguish the transaction currency from the base currency.
|
Type |
Date |
Transaction Exchange Rate |
Ending Exchange Rate |
Balance |
Gain/ |
Prior Gain/ |
Net Gain/Loss |
|---|---|---|---|---|---|---|---|
|
Invoice |
4/1/2022 |
2.00 |
2.50 |
£200.00 |
$100.00 |
0.00 |
$100.00 |
A currency revaluation (unrealized gain/loss) is created for the payment because the payment has not been applied to the invoice. The currency revaluation transaction includes the following columns in the Details subtab under Open Receivables.
|
Type |
Date |
Transaction Exchange Rate |
Ending Exchange Rate |
Balance |
Gain/ |
Prior Gain/ |
Net Gain/Loss |
|---|---|---|---|---|---|---|---|
|
Payment |
4/ |
2.15 |
2.50 |
-£200.00 |
$70.00 |
0.00 |
$70.00 |
On May 1, 2022, you fully apply the payment to the invoice, closing the transaction in the primary book.
Secondary Accounting Book and Historical Transaction Processing
You add a secondary book on May 5, 2022. Before you can activate the secondary book, you must process historical transactions. During historical transaction processing, the payment is automatically fully applied to the invoice on April 25, 2022 because that is the date of the payment transaction. Note that NetSuite applies the payment to the invoice in accordance with the date of the payment (April 25, 2022). NetSuite does not consider the date the payment was manually applied in the primary accounting book (May 1, 2022). The transaction is now closed.
A currency revaluation (realized gain/loss) is created for the invoice and payment in April 2022 on the secondary book. The amount posted to the Realized Gain/Loss account is $30.
After running historical transaction processing, you revalue open balances for April 2022 as part of your month-end close process. Since the payment was applied on April 25, 2022, there is no currency revaluation (unrealized gain/loss) for the invoice and payment in April 2022 on the secondary book.
During historical transaction processing, the payment is automatically applied to the invoice in the secondary book only when the same payment has already been applied to the invoice in the primary book.
Unrealized Exchange Rate Gains and Losses Report Differences
There is a difference in the total net/gain loss on the primary and secondary books for April 2022 in the Unrealized Exchange Rate Gains and Losses report. This difference is because there are currency revaluations (unrealized gain/loss) in the primary book, but not in the secondary book in April 2022.
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The total net/gain loss in April on the primary accounting book is $30.
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The total net/gain loss in April on the secondary accounting book is $0.
This example assumes that there were no other currency revaluations (unrealized gain/loss) in April 2022.
For more information about currency revaluations (unrealized gain/loss), see Revaluation of Open Currency Balances.
This example is specific to adding accounting books and historical transaction processing. For more information about these processes, see Adding Accounting Books.