Currency revaluation in a consolidation company

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
10/11/2015 110110 – Cash USD 500
10/11/2015 130100 – Accounts Receivable USD -500

Exchange rates

From currency To currency Start date Exchange rate
EUR USD 10/1/2015 200
EUR USD 11/1/2015 150
EUR USD 12/1/2012 100

Perform the consolidation for October 2015

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, 2015, through November 30, 2015

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, 2015, through December 31, 2015

Balances in the consolidation company

Ledger account Currency Amount Calculation
110110 EUR 500.00 Original amount of 500 × 1
130100 EUR -500.00 Original amount of -500 × 1
801400 EUR 250 500 – 333.33 = 166.67 166.67 + 83.33 = 250
801600 EUR -250 -500 – (-333.33) = -166.67 -166.67 + (-83.33) = -250