Reg: Revaluation in GL

[Murthyoracle]

Hi Group,

Can any one clarify my question. My question regarding in Revaluation in GL. I know the concept of Revaluation in GL. Usually we will enter any transactions in GL and those will be entered in Sub Ledgers.

For Example, when i have made Foreign Currency Transaction in Payables, It will automatically Update the Realized Gain /Loss Account. In this case, what will be done the Revaluation function in GL.

And please clariy the actual function of Revaluation in GL with real scnario if any.

This may be treated as Most Urget.

Thanks in advance,
Murthyorcle.

[chadha_gaurav]

Revaluation is done mainly for assets/liability accounts in general ledger, can you please elaborate your question so that the understanding is clear..

[guhanadh]

Revaluation is period end process. In GL if u run revaluation you can get only unrealized gain or loss. When you are making payment in sub ledger like AP and AR you can get realized gain.

[Shashi_k]

Hi Murthy,

It's a very good question which people like me who are at the entry level of apps would never think off. I am not to sure if my feeder module/sub ledgers foreign currency transactions will effect the realized gains/loss accounts. Revaluation is a month end process and it is for a reporting purpose. Transactions/journals which have come into GL from Feeder modules will be reevaluated at the month end and in this process it will created Journal entries and company can know by the reports if it has realized gains/loss on the foreign currency transaction. Journals entries created by revaluation program will be reversed in the next period so that it will not effect the actual profit and loss of the company. Please correct me if I am wrong.

Regards,
Shashi.

[Murthyoracle]

Hi Shashi,

You explanation is good. Definetly the Foreign Currency Transaction in Payables will be hit the Realized gain / Loss Accounts and those entires will be transferred to GL in the Month end Process. Here my question is again what is the question of usage of Revaluation in GL .

Earlier my question might not be clear.

My question is Usually in GL, We will not enter any transactions directly. The Transactions will be entered in respective Subledgers and those will be transferred to GL through Month End Process. After taking into consideration of Balance of Trail Balance of Sub Ledgers and GL Trail Balance. I know that the Revaluation is used to Calculate Assets/ Liabilities Accounts.

Therefore if transactions is not entered in GL Directly ,what is the Usage of Revaluation in GL . If any Please Calrify if possible with any scenerio.

Thanks and Regards,
Murthy oracle.

[Murthyoracle]

My question is regarding Revaluation Option in GL. I know that the Revaluation is used to Calculate Assets/ Liabilities Accounts and the functinality in GL. Usually in GL, We will not enter any transactions directly or manually. The Transactions will be entered in respective Subledgers and those will be transferred to GL through Month End Process. Here will be taken care of Balance of Trail Balance of Sub Ledgers and GL Trail Balance.

In view of above, if transactions is not entered in GL Directly ,what is the Usage of Revaluation in GL . In which Scenario Revaluation option will be used in GL with any Scenario. If any Please Calrify.

Thanks and Regards,
Murthy oracle.

[Shashi_k]

Hi Murthy,

We know that revaluation is for reporting purpose.
Assume that you have made a foreign currency transaction in INR at rate of .025 worth of 40000 on 15th of the May and your functional currency is USD. and on month end you have transfered the journals from AP to GL and assume that the rate at the month end is .030 meaning that there is change of some percent in conversion rate. so to makeout such difference on the day of purchase and at the end of the month and to know what is realized gain/loss at month end on such foreign transactions made for assets and liabilities.

Had we have payed it on the same day it would be 1000 USD and if we are making a payment at the month end it is 1200 so there is a realized loss to the company .

There is no facility in AP or for that matter in any of the subledgers for revaluation foreign transactions and to know what is realized gain or loss on it.

Please correct me if I am wrong.

Regards,
Shashi.

[Murthyoracle]

Hi Shashi,

Your explan; is correct. As per my knowledge, the before payment to know the gain /loss amount we have to follow the procedure of run the Revaluation in GL as there is no option in Subledgers. Revaluation will generate the Un relealized Gain/loss account journals. Basing on this we will the foreign currency amounts and automatically in Subledger the Gain /loss amount will be effected. Revaluation Journals need to Reverse in manually or Auto reversal.

[sekhardivvi]

As per our discution revalution in gl ment for only reporting purpose,
if u want to see the balensheet statement ,it is possible through gl right
i feel that it is ment only to see the statements

[dileepkumar]

foriegn currency journal uses daily exchange rate to convert the journal amount the conversition rate may change foriegn currency jounral not received or paid until later date ravaluation reflect in the change conversition rates

Eg: if you bought asset on some date on that day the currecy rate is 40USD but you made payment after 10days that day curreny is 39USD
that is unrealaised Gain did you understand