Revaluation in Reopened Periods
In this example, after you have revalued and closed January, February, and March, you reopen January. You then post a journal that increases the balance of a British pounds foreign currency account for a U.S. based subsidiary. When you reopen January, the accounting periods of February and March are automatically reopened.
After posting the change to January, you must complete the revaluation for all three periods again to be able to re-close them. Revaluations for February and March take into account the posting change and the revaluation of previous periods. These revaluations adjust accounts accordingly, as if the new posting had been originally made before the first set of revaluations.
This example for foreign currency accounts includes the following details:
-
Initial transactions:
Foreign Currency Amount
Base Currency Amount
Exchange Rate
January Journal
£50
$75
1.5
February Journal
£50
$100
2.0
March Journal
£50
$150
3.0
-
Initial period close revaluations:
Period
Foreign Currency Balance
Base Currency Balance
Exchange Rate
Net Gain/Loss
January
£50
$75
2.0
$25
February
£100
$175
3.0
$125
March
£150
$325
4.0
$275
-
Account balances in foreign currency and base currency (cumulative), plus ending exchange rate, after period close:
Period
Foreign Currency Balance
Base Currency Balance
Ending Exchange Rate
January
£50
$100
2.0
February
£100
$300
3.0
March
£150
$600
4.0
-
New transaction after reopening January, February, and March:
Foreign Currency Amount
Base Currency Amount
Exchange Rate
January Journal 2
£50
$100
2.0
-
Rerun Period Close Revaluations for all three periods.
No new currency revaluation is created for January because the new journal has the same exchange rate as the period end. For the other periods, new currency revaluation transactions are created to account for the changed foreign currency balance.
Period
Foreign Currency Balance
Base Currency Balance
Exchange Rate
Net Gain/Loss
January (initial only)
£50
$75
2.0
$25
February (initial)
£100
$175
3.0
$125
February (rerun)
£150
$400
3.0
$50
March (initial)
£150
$325
4.0
$275
March (rerun)
£200
$700
4.0
$100
-
Foreign currency account balance (cumulative) with new transaction and after revaluation is rerun:
Period
Foreign Currency Balance
Base Currency Balance
Ending Exchange Rate
January
£100
$200
2.0
February
£150
$450
3.0
March
£200
$800
4.0