Bank foreign currency revaluation in Microsoft Dynamics 365 Finance and Operations

This topic provides an overview of the process of bank foreign currency revaluation. It explains how to set up and run the process and provides information about the calculation for the process. It also explains how to reverse revaluation transactions if reversal is required.

As part of a period end, accounting conventions require that bank account balances in foreign currencies be revalued by using different exchange rate types (current, historical, average, and so on). The bank foreign currency revaluation feature can be used to revalue one or more bank accounts. The feature is also a global feature. Therefore, from a single page, you can revalue banks across all the legal entities that you have access to.

Note: When you run the revaluation process, the balance in each bank account that is posted in a foreign currency will be revalued. The unrealized gain or loss transactions that are created during the revaluation process are system generated. Two transactions might be created, one for the accounting currency and one for the reporting currency if a reporting currency is relevant. Each accounting entry will be posted to the unrealized gain or loss and the main account that is being revalued.

Pre-requisites:

Enable foreign currency revaluation

Navigate to, Cash and Bank > Periodic > Foreign currency Revaluation

Specify All the parameters to Evaluate

Preview Revaluation before posting

Post and review Voucher entries

Note-1: A transaction is created for the difference between the balance of the bank account and the new balance that is calculated for the accounting currency. Another transaction is created for the difference between the balance of the bank account and the new balance that is calculated for the reporting currency

Note-2: The entries for these transactions are marked as reconciled.

Note-3: No entry is made for the accounting currency if the bank currency matches the accounting currency. Likewise, no entry is made for the reporting currency if the bank currency matches the reporting currency.

Note-4: The foreign currency revaluation transaction is also split across the dimensions that are found on the bank transactions. The split is based on the balance for each dimension.

For example, the total bank balance is 10,000, but the balance for business unit 001 is 4,000, whereas the balance for business unit 002 is 6,000. In this case, 40 percent of the revaluation amount is posted to the revaluation account that has business unit 001, and 60 percent is posted to the revaluation account that has business unit 002. If the account structure doesn’t include a business unit, the full amount is posted to the revaluation account.

That’s it for this blog, hope this will help you in setting up this process.

Thank You !!! Keep reading and Sharing !!!