How does Revaluation Work?

If an account is selected to be revalued in Oracle General Ledger, only rows in the GL_BALANCES
table with TRANSLATED_FLAG = R, are candidates for revaluation, i.e. foreign entered amounts. Below is
the formula:

REVALUATION AMOUNT =
((begin_balance_dr + period_net_dr - begin_balance_cr - period_net_cr) * revaluation_rate))
LESS
(begin_balance_dr-beq + period_net_dr_beq - begin_balance_cr_beq - period_net_cr_beq)

The result of this calculation will be the amount of the journal entry for this account. Each foreign entered
currency for an account would have a separate journal entry.

Assume the Functional Currency is USD, and GBP would be an entered foreign currency. The
GL_BALANCES table for code_combination_id (ccid) 123, an asset account, looks like this for the
month, JAN-02.

The following columns will be used in the examples:

Period_Net_DR = Per DR
Period_Net_CR = Per CR
Begin_Balance_DR = Beg DR
Begin_Balance_CR = Beg CR
Period_Net_DR_Beq = PDR Beq
Period_Net_CR_Beq = PCR Beq
Begin_Balance_DR_Beq = BDR Beq
Begin_Balance_CR_Beq = BCR Beq
Code_Combination_ID = CCID
Currency_Code = Curr Code
Translated_Flag = Trans Flag

(Details of the entries affecting the balances for CCID 123 are shown for clarification.)

JAN-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5000 3000

JE1 250
JE2 160
JE3 90
JE4 200
500 200 5000 3000

Bbal 123 GBP R

JE2 100 160

1
Example 1: What happens when CCID 123 is revalued? The revaluation rate for
GBP for JAN-02 is 1.75.
REVALUATION AMOUNT = ((0 + 100 - 0 - 0) * 1.75) - (0 + 160 - 0 - 0) = 15

The journal entry for this account would be in GBP, the entered foreign amount would be ZERO and the
accounted amount would be 15. After this entry is posted, the balances would look like this:

JAN-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5000 3000

JE1 250
JE2 160
JE3 90
JE4 200
500 200 5000 3000
Reval 15
Ebal 123 USD 515 200 5000 3000

Bbal 123 GBP R

JE2 100 160
Reval 0 15
Ebal 123 GBP R 100 175

Example 2: During FEB-02 the revaluation entry is reversed, a few more entries
are posted and revaluation is run again. The revaluation rate for FEB-02 is 1.80.
The balances before the revaluation journal:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
R_Reval 15
200 300 5515 3200

Bbal 123 GBP R 100 175

JE2 50 85
R_Reval 0 15
50 0 100 85 15 175

2
REVALUATION AMOUNT = ((100 + 50 - 0 - 0) * 1.8) - (175 + 85 - 0 - 15)) = 25

After the revaluation journal is posted, the balances would be:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
R_Reval 15
200 300 5515 3200
Reval 25
Ebal 123 USD 225 300 5515 3200

Bbal 123 GBP R 100 175

JE2 50 85
R_Reval 0 15
50 0 100 85 15 175
Reval 0 25
Ebal 123 GBP R 50 0 100 110 15 175

At the end of the month there are 150 GBP’s in the account revalued at 1.8, or 270 USD (110 +175 -15).
The total USD balance is (5515 + 225 - 3200 -300) = 2240.

Example 3: What happens in example 2, if the revaluation reversal entry is

deleted and a manual reversal entry is created to replace it?

Balances before revaluation:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
MR_Reval 15
200 300 5515 3200

Bbal 123 GBP R 100 175

JE2 50 85
MR_Reval
50 0 100 85 175

(Note the manual reversal ‘MR_Reval’, does not affect the balances for GBP.)

3
REVALUATION AMOUNT = ((100 + 50 - 0 - 0) * 1.8) - (175 + 85 - 0 - 0) = 10.

After Revaluation Balances:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
MR_Reval 15
200 300 5515 3200
Reval 10
Ebal 123 USD 210 300 5515 3200

Bbal 123 GBP R 100 175

JE2 50 85
MR_Reval
50 100 85 175
Reval 0 10
Ebal 123 GBP R 50 100 90 175

At the end of the month there are 150 GBP’s in the account revalued at 1.8, or 270 USD (95 + 175).
The total USD balance is (555 + 210 - 3200 - 300) = 2225.

The results at the end of the month are different using the manual reversal. The problem being the manual
reveral (MR_Reval) is entered in USD and the 15 is not reversed out of the BEQ column, this causes the
revaluation amount to be calculated 15 lower than expected. (It is not possible to enter a manual entry that
replicates the entry created by the program for the reversal.)

Example 4: What happens in example 2, if the revaluation entry is not reversed?

Balances before Revaluation:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
200 285 5515 3200

4
Bbal 123 GBP R 100 175
JE2 50 85
50 100 85 175

REVALUATION AMOUNT = (( 100 + 50 - 0 - 0) * 1.8) - (175 + 85 - 0 - 0) = 10

Balances after Revaluation:

FEB-02 Curr Trans Per Per Beg Beg PDR PCR BDR BCR
CCID Code Flag DR CR DR CR Beq Beq Beq Beq

Bbal 123 USD 5515 3200

JE1 115
JE2 85
JE3 285
200 285 5515 3200
Reval 10
Ebal 123 USD 210 285 5515 3200

Bbal 123 GBP R 100 175

JE2 50 85
50 100 85 175
Reval 0 10
Ebal 123 GBP R 50 100 95 175

At the end of the month there are 150 GBP’s in the account revalued at 1.8, or 270 USD (95 +175).
The total USD balance is (5515 + 210 - 3200 - 285) = 2240. This is the same result as in example 2.

The decision to reverse the entry or not, depends on business preferences. If you want the revaluation journal
to reflect the difference between the current rate and the rate of the date of the original transactions, then
reverse the revaluation journal. If you prefer the revaluation journal to reflect the difference between the
current rate and the rate used the last time you revalued, do not reverse the revaluation journal in the next
period. Some clients revalue more than once during a period (additional entries or rate correction), so they
do not reverse the revaluation journal (in the current period) in order to see the incremental effect sine the last
revaluation run.

Bill Szakovits
Oracle General Ledger Support
Orlando, Florida