When you consolidate data from one accounting currency to another, you must still run currency revaluation if there is a change in exchange rates, so that your account balances are correctly revalued. When you originally consolidate the data, use the Currency translation tab to select the initial exchange rates to for translation during the consolidation process. After a new exchange rate is entered (for example, in the next month), you must revalue the account balances. The unrealized gains or losses are then updated accordingly, based on the new exchange rate and date. The following example illustrates the accounting entries that are created during the process.
Company setup
Source/operating company (USMF) – US dollars (USD) are used as the accounting and reporting currency.
Consolidated company (CON) – Euros (EUR) are used as the accounting and reporting currency.
Realized gain– Ledger account 801500
Realized loss – Ledger account 801600
Unrealized gain – Ledger account 801600
Unrealized loss – Ledger account 801400
Original transactions
Cash receipt transactions in USMF
Date
Ledger account
Currency
Amount
10/11/2020
110110 – Cash
USD
500
10/11/2020
130100 – Accounts Receivable
USD
-500
Exchange rates
From currency
To currency
Start date
Exchange rate
EUR
USD
10/1/2020
200
EUR
USD
11/1/2020
150
EUR
USD
12/1/2017
100
Perform the consolidation for October 2020
Balances in the consolidation company
Ledger account
Currency
Amount
Calculation
110110
EUR
250
500 USD × 50%
130100
EUR
-250
-500 USD × 50%
Perform currency revaluation for the accounts from October 1, 2020, through November 30, 2020
Balances in the consolidation company
Ledger account
Currency
Amount
Calculation
110110
EUR
333.33
Original amount of 500 × 66.6667%
130100
EUR
-333.33
Original amount of -500 × 66.6667%
801400
EUR
83.33
333.33 – 250
801600
EUR
-83.33
-333.33 – (-250)
You will see additional transactions for the reporting currency amounts.
Perform currency revaluation for the accounts from October 1, 2020, through December 31, 2020