Revaluation Process

The revaluation process is used to adjust account balances denominated in a foreign currency. Revaluation adjustments represent the difference in account balances due to changes in conversion rates between the date of the original journal and the revaluation date.

These adjustments are posted through journal entries to the underlying account with the offset posted to an unrealized gain or loss account. All debit adjustments are offset against the unrealized gain account and all credit adjustments are offset against the unrealized loss account. If the same account is specified in the Unrealized Gain Account and Unrealized Loss Account fields, the net of the adjustments is derived and posted.

For balance sheet accounts, the revaluation journal entries are reversed in the next period. AutoReverse can be used to automate the reversals. For income statement accounts that use the PTD method of revaluation, the revaluation journals aren't reversed since each period's revaluation adjustment is for that period.

In Oracle General Ledger, the revaluation functionality provides the following advantages:

• Full multicurrency functionality to eliminate currency barriers across a global business.

• Predefined revaluation rules to ensure consistency in generation of revaluation entries each period.

• Usage of prevailing currency normalization accounting standards including:

  • US Financial Accounting Standards Board, Financial Accounting Statement No. 52 (FAS 52), Foreign Currency Translation.

  • International Financial Reporting Standards, International Accounting Standard No. 21 (IAS 21), The Effects of Changes in Foreign Exchange Rates.

• Support for multiple balancing segments to provide clarity in tracking the profitability and performance for more distinct segments of your enterprise in any currency

Definition

When defining your revaluations, perform the following:

• Include accounts for tracking gains and losses, currency conversion rates, and the number of entered currencies to revalue.

• Define separate revaluation definitions for each class of accounts, using a different rate type for each class.

• Select various conversion types and methodologies for different account ranges, such as:

  • Current rates and year-to-date (YTD) method for balance sheet accounts.

  • Average rates and period-to-date (PTD) method for income statement accounts.

Note: Income statement accounts can also be revalued using the YTD method.

Hierarchies and flexible account selection criteria, such as usage of parent values from your account hierarchy, streamlines maintenance of revaluation definitions. The parent values can be selected for the primary balancing and the natural account segments using the operator Is a last descendant of. Leverage hierarchy versions to include organizational changes in your revaluation definitions. Adjust account selection criteria monthly to retrieve the accounts that must be revalued for the current accounting period.

Share revaluation definitions across ledgers that have the same chart of accounts to reduce maintenance.

Generation

Generating revaluations include:

• Using defined revaluation criteria and automatically generating entries to shorten your close process.

• Selecting automatic posting as part of the generate revaluation criteria to help you to achieve processing efficiency.

• Scheduling revaluations to run during off peak hours to save your processing resources.

• Using date effective account hierarchies to generate revaluations to keep results in line with your current organization hierarchies.

Always run revaluation to bring monetary balances to current rates before performing currency translation or remeasurement.

Note: When the revaluation process is scheduled to run automatically, the accounting period increments on each subsequent run.

Revaluation Execution Report

The Revalue Balances process automatically generates the Revaluation Execution report when you run revaluation. This report shows the details of your account balance revaluation and the journal batches created after running revaluation. The report includes:

• Currencies and revaluation rates used to revalue your accounts.

• Unrealized gain or loss account in which you recorded net gains and losses.

• Range of accounts revalued.

• Names of your batch and journals that the revaluation process created for each foreign currency.

• Total debits and credits of the created entries.

If the Revaluation process can't locate rates for one or more currencies, balances aren't revalued for those currencies. In this case, the Revaluation process completes with a warning and the execution report lists which currencies are missing rates.