Revalue a foreign currency bank account

Find this screen

Open: Cash Book > Period End Routines > Foreign Bank Revaluation

How to

Revalue a bank account

Open: Cash Book > Period End Routines > Foreign Bank Revaluation

1. Select the Bank account that you want to revalue.

   If the foreign currency balance of the account is zero, confirm that you also want to make the base currency value of the account, zero.

2. 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.

3. Enter the New rate of exchange, if the currency is amendable.

   The Exchange difference value is automatically calculated and displayed.

4. To revalue the bank account, click Save.

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Useful info

Why should I revalue a bank account?

Over time, fluctuating exchange rates can affect the true value of the balances on foreign currency bank accounts you hold.

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 200 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 revalue the bank account, Sage 200 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.

Example revalue a bank account

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.

How the revaluation is calculated

The revaluation is calculated in the following way:

1. New balance (new balance in base currency) = Balance (current balance in foreign currency) ÷ New rate (new exchange rate)

2. Exchange difference (Gain or Loss) = Old balance (current balance in base currency) - New balance (balance in base currency after applying new exchange rate)

What are the rates and balances?

When you revalue a bank account, Sage 200 displays two exchange rates:

• Old rate: This is the current effective exchange rate. This rate is calculated as the Balance (current foreign currency balance of the bank account), divided by the Old balance (current base currency balance of the bank account). You cannot amend this rate, as it is shown for information only.

  Note: The Old rate and Old balance do not refer to the rate and balance that were used when you last revalued the bank account, but they include your current transactions entered since your last revaluation.

• New rate: This is the rate Sage 200 will use to convert the foreign currency bank balance to the base currency. The New rate displayed is the current exchange rate as set in Currencies and Exchange Rates. You can change this exchange rate, if the currency is amendable.

There are also three balances:

• Balance: This is the current balance of the bank account in the account's foreign currency. This is not updated by the revaluation process but it is the balance on which the revaluation is based. This is the balance that you see when you view the bank account.

• Old balance: This is the current balance of the bank account 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 balance of your bank account in your base currency after the revaluation takes place. When you select Save, this is what your new balance will be and this will be reported on your Balance Sheet.

Revalue accounts with a zero balance

Revalue a bank account when the foreign currency balance is zero

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.

Revalue a bank account when the base currency balance is zero

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.

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What happens

When the bank account is revalued

When you revalue the bank account:

• 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 done this, the adjustment is posted to the suspense account.