Some accounting standard-setting bodies require that you take gains or losses due to fluctuating exchange rates into income in the period in which they occur.
If you use multicurrency accounting in your Accounts Receivable ledger, you may need to revalue transactions at new exchange rates periodically to determine the value of receivables on specific dates, such as at financial statement dates.
The revaluation process recalculates the functional-equivalent values of all outstanding multicurrency Accounts Receivable documents, including details, at new exchange rates.
In Sage 300, exchange gains and losses are treated as either permanent or temporary, depending on the exchange Gain/Loss Accounting Method specified for your Sage 300 system on the Company Profile screen in Common Services:
With this accounting treatment, exchange gains and losses are recognized immediately when you revalue transactions, and they are not reversed in the next period.
With this accounting treatment, realized exchange gains or losses are calculated only when transactions are settled—that is, when you post receipt to pay invoices and debit notes, or when you post credit notes to pay down invoices.
Accounts Receivable produces reversing entries for the unrealized exchange gain and loss accounts in the specified account sets. When you post the revaluation transactions to any fiscal period in Sage 300 General Ledger or your other general ledger, they are automatically reversed in the next fiscal period.
These differences are explained more fully in the following sections.
If your Sage 300 system uses the Realized and Unrealized Gain/Loss method to revalue multicurrency amounts, Accounts Receivable calculates unrealized exchange gains or losses as follows:
| Source amount | x | Revaluation rate | |
| Less: | Functional amount | ||
| Equals: | Unrealized exchange gain (loss) | ||
When you post the revaluation batch in General Ledger, the program also posts a reversing entry to the first day of the next fiscal period.
You revalue a customer's account at a higher exchange rate, which results in a $10 increase in the account balance in functional currency.
Accounts Receivable creates a journal entry debiting the Receivables Control account and crediting the Unrealized Exchange Gain account for $10.
At the beginning the next fiscal period, you post a reversing entry in your general ledger, debiting the Unrealized Exchange Gain account and crediting the Receivables Control account for $10.
When you print the Customer Transactions report for the customer, both transactions appear for the period in which you posted the reversing revaluation transactions. Their net effect on the account balance is zero. The revaluation transaction is shown as type "GL."
When you use the Realized and Unrealized Exchange Gain/Loss method to record exchange gains and losses, any gains or losses arising from differences in exchange rates at the time of settlement are called "realized" gains or losses.
When you apply multicurrency payments, credit notes, debit notes, or adjustments to another document, if the exchange rate used for the applied document is different from the current rate of the "apply-to" document, Accounts Receivable recognizes an exchange gain or loss, as follows:
| Source amount | x | Current rate of applied document | |
| Less: | Source amount | x | Current rate of apply-to document |
| Equals: | Exchange gain (loss) or realized exchange gain (loss) | ||
When you post the revaluation batch in General Ledger, no reversing entries are created for the next fiscal period.
If you use the Recognized Exchange Gain/Loss method, when you post multicurrency receipts or credit notes in Accounts Receivable, you use the exchange rate in effect at the time.
Any difference between the original exchange rate for the invoice and the rate entered with the receipt or credit note is a realized gain or loss.
Accounts Receivable creates transactions for the realized exchange gain or loss accounts in your general ledger.
Realized exchange gains or losses are also calculated when you post an adjustment that reduces the balance on an invoice or debit note to zero.
Sage 300 lets you post a multicurrency document that predates the last revaluation for the document currency, and it lets you apply the backdated document. An exchange gain or loss can arise.
The accounting method you use to record exchange gains and losses in your Sage 300 system determines how the revaluation process handles backdated documents:
To automatically correct these exchange gains or losses, enter or accept a date in the Earliest Backdated Activity Date field on the A/R Revaluation screen.
You can also choose to ignore the backdated document, for example, if it is not material or if you posted it to a period that does not coincide with the end of a reporting period. If you do not want the program to revalue backdated documents and activity when you perform a backdated revaluation, leave the Earliest Backdated Activity Date field blank on the A/R Revaluation screen.
Accounts Receivable adjusts exchange gains and losses for backdated documents and documents affected by backdated activity as of the balance sheet dates:
If you use the Recognized Gain/Loss accounting method, when you revalue a document that uses a multiple payment schedule, the A/R Revaluation screen revalues each portion of the invoice that is due and applies the sum of the net gains (or losses) to the document.
If you want to preview the effects of a revaluation before you process the revaluation, you can select the Provisional Revaluation option on the A/R Create Revaluation Batch screen. This option produces a posting journal of the transactions that would be created if you processed a real revaluation using the same criteria as you used in the provisional run.
A posting sequence number is assigned each time you post a provisional revaluation. The number is printed with transactions in the Provisional Revaluation Posting Journal.
After checking the Provisional Revaluation Posting Journal, you can either do another provisional revaluation, specifying different criteria, or do a real revaluation, creating entries for your general ledger.
You do not post revaluation batches in Accounts Receivable.
During revaluation, Accounts Receivable creates a batch for Sage 300 General Ledger, if you use it, or (as an export batch) for your other general ledger.
Accounts Receivable creates an export batch for your general ledger. If you import a revaluation batch into another general ledger, make sure that the revaluation transactions are reversed in the next fiscal period.
Note: Rounding differences may occur during revaluation. These exchange differences are automatically posted to the exchange rounding account when payments are posted.
You can print a list of revaluation transactions, using the Posting Journals screen and selecting the Revaluation option. You can also print the transactions on the A/R G/L Transactions report, selecting Revaluation as the batch type, and on the batch listing in Sage 300 General Ledger, if you use it.