What is Ledger Revaluation?
Ledger Revaluation (LER) revalues one currency against another currency on a group of transactions. For the revalued currency, it calculates the difference between the original and revalued amount on each transaction. This revaluation difference may be:
- an unrealized currency gain or loss resulting from a fluctuation in the exchange rate, or
- a balancing adjustment reflecting a rounding difference.
Ledger Revaluation can post revaluation transactions to the ledger to reflect the difference in your accounts, or simply report on the differences.
You can identify the transactions to be included in a revaluation precisely by specifying the selection criteria in Ledger Revaluation Profiles (LEP).
Selecting the Revaluation Source and Target Currencies
Each ledger transaction can contain up to four currency values, depending on the business unit setup: base currency, transaction currency, second base/reporting currency, and fourth currency.
Ledger Revaluation revalues one of these currencies, the target currency, against another currency, the source currency. This means that it takes the source currency value on each transaction and uses the revaluation period exchange rate to calculate a revised target currency value.
The source and target currencies you specify in the ledger revaluation profile depend on your revaluation requirements, and on your pivot currency. This in turn affects the transaction values that are calculated and posted on the revaluation transactions.
Selecting the Transactions to Revalue
You can set up the ledger revaluation profile to select the transactions to be revalued by account type, account code range, journal type range, journal number range, and currency code. For example, you may only want to revalue the open currency transactions on your debtor, creditor and client accounts.
The rate used for revaluation is the Currency Rate Type (CRT) specified on the Ledger Revaluation Profile. If no Currency Rate Type exists the period rate setup in Currency Period Rates (CNP) is used. Ledger Revaluation does not use daily rates; however, source transactions posted with daily rates can be revalued.
Posting the Revaluation Differences
Ledger Revaluation can revalue each selected transaction and post the resulting revaluation difference for each transaction individually.
If you need to revalue a large number of transactions you can choose to consolidate the transactions and revalue and post the consolidated difference. For each currency, you can consolidate by period, analysis dimension, asset, and account.
Revaluing Fixed Asset Transactions
The accounts to which asset depreciation is posted are normally excluded from the ledger revaluation process. This is because depreciation in the transaction currency is calculated independently of the base currency depreciation, and may be calculated using a different depreciation method.
On other asset related transactions, the asset codes are retained on the revaluation transactions. The revaluation transactions can be consolidated by asset code.
Provisional Revaluation Postings
If provisional postings are optional, you can choose to post provisional transactions from Ledger Revaluation.
Another feature associated with provisional transaction processing, but which can be used independently, is the ability to record a sequence code and number for each transaction line or reference in a journal. This sequencing can be applied to system generated Ledger Revaluation transactions.