• saber
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Topic: Currency Revaluations - Supplier/Customer balances

I gather that currency revaluations routine does revaluations only for cash/bank accounts. Whereas logically it should also revalue any foreign currency (other than default currency) suppliers/customers balances as well.

For example, a supplier invoice for GBP1,000 is booked in US$ company on 01-Jan-2011 at a rate of 1.6 as US$1,600. If the same invoice is outstanding at 28-Feb-2011 when the rate has changed to 1.5, the revaluation routine should decrease the supplier liability by US$100 and record an exchange gain of US$100.  At the time of payment FA does record relevant revaluation correctly, however it should also revalue any supplier/customer balances.

  • joe
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Re: Currency Revaluations - Supplier/Customer balances

The customer/supplier balances are always presented in the customers/suppliers currency. Any calculations in domestic currency is done by the rate per record date.

Only the GL values are revaluated. This is a correct behaviour.

/Joe

3 Reply by saber (edited by saber 05/07/2011 07:38:21 am)

  • saber
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Re: Currency Revaluations - Supplier/Customer balances

In my case the GL entries are never revalued for supplier balances.

I'll try to explain the scenario once again as I think it may be unclear last time.

In the previous example, if the invoice remains outstanding for a number of years, FA would never revalue the supplier liability account in GL until settled as the GL entries would remain intact at US$1,600. This is incorrect from an accounting perspective as the company actually owes GBP1,000 that may be worth US$2,000 (assuming a rate of 1 GBP = 2 US$) at a particular date and the balance sheet should reflect US$2,000 and not US$1,600 as liability.

  • joe
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Re: Currency Revaluations - Supplier/Customer balances

If this is of importance for you then you should make the revaluation manuelly in GL. The revaluations against invoices/credit notes are done when doing the payments.

Your suggestions will require extra overhead.

/Joe

  • saber
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Re: Currency Revaluations - Supplier/Customer balances

Since this is the correct way of accounting, I would expect this to be included in FA at some point in time otherwise FA would not be handling mulit-currency transactions properly. In other words, it is simply not a wish but a necessary fix to FA.

  • joe
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Re: Currency Revaluations - Supplier/Customer balances

I have redirected a similar discussion we have had here.

https://frontaccounting.com/punbb/viewtopic.php?id=2057

I will try to explain how we eventually can solve it in FA. Please correct me if something seems wrong in my explanation.

We save the rate on the debtor_trans and supp_trans and we save the currency on the customer/supplier.

A revaluation could run with the following formula:

SUM all currency customers not fully allocated records with the rate of the record date and SUM all currency customers not fully allocated records with todays rate. The differences are booked on AR account and Exchange Variation Account.

SUM all currency suppliers not fully allocated records with the rate of the record date and SUM all currency suppliers not fully allocated records with todays rate. The differences are booked on AP account and Exchange Variation Account.

Well while we are doing that shouldn't we now replace all the rates on the records with todays rate? Otherwise we can't do this revaluation more times, right?

Can anybody see any side-effects with this?

/Joe
.

  • saber
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Re: Currency Revaluations - Supplier/Customer balances

I agree to the proposed solution.

And yes, at the time of revaluation, all record rates would have to be replaced by today's rate although we would lose historical rates this way but I don't think we would require them.

8 Reply by Eglis (edited by Eglis 05/07/2011 04:43:13 pm)

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Re: Currency Revaluations - Supplier/Customer balances

I agree too, thanks joe