Find this screen
Open: Period End Routines > Foreign Bank Revaluation.
Revalue a bank account
- Select the bank account from the drop-down list.
Enter the Revaluation date. This is the date the revaluation transaction is posted.
Note: The revaluation amount will be calculated using the current value of your bank account today, not the Revaluation date you enter here.
- Click to change the exchange rate, if required.
- Enter a Reference and Description for the transaction if required.
- The Exchange difference is automatically calculated and displayed. This is the amount that's posted to the bank's nominal and the exchange difference nominal accounts.
- To revalue the bank account, click Save.
When to use this
Over time, fluctuating exchange rates can affect the true value of the balances on foreign currency bank accounts you hold.
Say, in January you post a $100 transaction to your dollar account when the exchange rate is 1.5. Sage 200cloud posts this to your nominal accounts in base currency, so it's worth £66.66.
- In March the exchange rate shifts to 1.7 so the value of the $100 at that time is actually £58.82.
- In July the exchange rate shifts to 1.3 so the value of the $100 at that time is actually £76.92.
Over the course of those few months the true value of that $100 has fluctuated between £58.82 and £76.92 but has always been held as £66.66 in Sage 200cloud.
Imagine the disparity that could arise when thousands of transactions are posted.
To make sure that the true value of your foreign accounts is up-to-date, you can revalue the balance of foreign bank accounts. This applies the most up-to-date exchange rate to your bank balance.
To do this, Sage 200cloud uses the current exchange rate to recalculate the balance of the nominal account (which is in your base currency) and linked to the bank account.
When you then save the revaluation Sage 200cloud posts gains or losses (as appropriate) to:
- The bank account's nominal account. This is the balance that will be reported on your Balance Sheet.
The Exchange Difference nominal account.
Note: If a nominal account for Exchange Differences isn't specified in the Default Nominal Accounts screen, this is posted to the suspense account.
How the balance is recalculated
The revaluation is calculated in the following way
About revaluing the bank account
When you revalue a bank account, Sage 200cloud displays two exchange rates:
Old rate - This is the current effective exchange rate. This rate is calculated from the foreign currency balance of the bank account and the base currency balance displayed in the Old balance field. Shown for information only, you cannot amend this rate.If this is not as expected
This is calculated based on the transactions that have been posted to this account. If you have revalued the bank account before, i.e. at the end of the previous month, the old rate will be calculated based on the last revalued balance (using the specified exchange rate) plus the transactions entered since.
- New rate - This is the rate Sage 200cloud will use to convert the foreign currency bank's balance to base. The rate displayed is the current exchange rate as maintained on the Currencies & Exchange Rates screen.
If required, youcan change this exchange rate.
There are also three balances:
- Balance - This is the balance of the bank account in the account's currency. This is not updated by the revaluation process but it is the balance on which the revaluation is based.
- Old balance - This is the current bank balance in your base currency. If you produced a Balance Sheet now this is the balance that would be reported. This balance will be affected by the revaluation.
- New balance - This is what your base currency bank balance will be after the revaluation takes place. When you click Save, this is what your new balance will be and this will be reported on your Balance Sheet.
You can revalue a bank account where the foreign currency balance of the account is zero, but the base currency balance has a value.
This sets the base currency balance of the account to zero. No Old rate is calculated. An adjustment is posted to your nominal accounts.
You can revalue a bank account where base currency balance of the account is zero, but the foreign currency balance has a value.
You specify a new exchange rate for the bank account. The base currency value of the account is calculated using the foreign currency balance and the new exchange rate. No Old rate is shown. An adjustment is posted to your nominal accounts.
Note: You cannot revalue a bank account if both the foreign currency account balance and the base currency account balance are zero.
Your company produces a monthly Balance Sheet. As you have suppliers and customers who operate in US Dollars, your company has a number of Dollar bank accounts.
Each month, you revalue all the Dollar bank accounts, before the Balance Sheet is produced, using the exchange rate printed in the Financial Times.
This is to make sure that each time a Balance Sheet is produced, the balances of your foreign bank accounts reflects their true value and you know the exchange rate that has been used to produce these bank balances.
What happens when
The bank account is revalued?
- A revaluation report is produced. This shows the balances of the bank account, the exchange rate used, and the adjustment transaction that has been posted.
- The foreign currency account balance and the base currency account balance are adjusted.
Any currency gain or loss is posted to the nominal account for the bank account and the default nominal account for Exchange Differences.
Tip: Make sure you've entered specified a nominal account for Exchange Differences on the Default Nominal Accounts screen. If you haven't don this the adjustment is posted to the suspense account.