Revaluing Base Currency using Transaction Currency as the Source

This is the most common type of revaluation and it generates unrealized currency gain or loss postings.

It recalculates the base currency value on each transaction from the transaction currency value using the revaluation period exchange rate.

The following table indicates the values that are included on the revaluation posting, depending on which currency is the pivot:

Pivot is: Value 1 Value 2 Value 3 Value 4
Base X   X  
Transaction Currency X      

Base Currency is Pivot

If the base currency is the pivot, this is an example of the split risk currency model. The exchange risk is split between the local company and the parent company. This revaluation performs two calculations and includes two values on the revaluation posting:

  1. The base value is recalculated from the transaction currency.
  2. The second base/reporting currency value is calculated from the revalued base value.
Note:  These calculations are performed in this sequence because the conversion must be made via the pivot currency.

Transaction Currency is Pivot

If the transaction currency is the pivot, then this is an example of the GAAP currency model where the exchange risk is taken by the parent company. Only the base currency value is updated by the revaluation. As a result, a second revaluation run may be run to revalue the second base/reporting currency, again using the transaction currency as the source.