What is Translation and Revaluation in GL?

[ramu.parepalli]

I request th Group to draw differences between Translation and Revaluation in GL and also request you the rate followed by Translation and Revaluation?

[k.khan]

hi,
Transalation is the process by which we change the amount/balances from the foriegn curruncy to the native(domestic/functional) one where as in revaluation we revalue any assets or liabilities on certain condition like fair market price or the historical rate or the new captilisation we have made over it

[lnarayanaj]

Translation is the process which picks up the foriegn currency balances and converts them into functional currency balances (for a particular period,SOB,etc). So basically the translation process will generate additional records in the gl_balances table. It only operates at the balances level and not on the transactions/journals level. It picks up the periods rate defined for that period.(not the daily rates).

Revaluation is a process which is typically run periodically to account for the loss/gain in the foreign currency. As an ex, if there is a transaction is foreign currency and it could have gained some value due to the economic differences. So revaluation process will take notice of this and create the new journals which account for the net loss/gain. So these journal will have to posted again. Revaluation process will not update the gl_balances.

Hope the above explanation is clear.

[yemfola]

Hi
Thanks for the explaination. Do we still need revaluation after translation has taken place?
Please explain more.

thanks

[Raghav18]

Hi Folks,

Usually revaluation or Translation are period end processes.

We have to first do the revaluation part, the reason being if you have any foreign currency journals we have to do revaluation inorder to capture the difference between the transaction date and period end date.

Later the translation process as defined above.

Regards,
Raghav.

[Cheekoo]

Revaluation : Period-end process where you assess value of ASSET (for example 1,000/- CASH foriegn currency .. say EUR ) according to new rates. Generally the value of your cash euro is not the same as it was the last month. So when you revalue it with new rate it gives you higher or lower value of same 1,000/- EUR. The difference is then tranfered to/from gain/loss P&L account. Actual transaction/Journal is passed to capture this transaction.

EUR1,000/- @1.5 = USD1,500/-(USD is Functional Currency) as it appears on daily reports.
Revaluation is done and period end rate is @1.47
Now EUR1,000/- @1.47 = USD1,470/-(USD30/- is GAIN) will be transfered to profit and loss account. Now we can BUY EUR1,000/- for only USD1,470/-

Translation : For Balance sheet and reporting purposes only. No journal is passed. Any FC Balance in any summary account is translated into Functional currency balance to report on balance sheet ot other reports.

I hope this helps you understand.

[yemfola]

Thank you cheeko for your explaination.