Currency revaluation

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This article provides information about the foreign currency revaluation process implemented in 1C:Drive.

Contents

Overview

Setting up currency revaluation

Methodology

Affected documents

Revaluating advances

Notes

Overview

Foreign currency exchange rates fluctuate over time, causing the book value of monetary assets and liabilities in foreign currencies to change. Currency revaluation procedure is used to determine and record these changes, updating the value of such assets and liabilities.

The procedure calculates exchange rate difference on a specified date, revalues the currency amounts, and records the difference as income or expenses.

For example, consider you’re an US business selling goods worldwide. Your presentation currency is USD, and your settlement currency for European customers is EUR. On January 10th, you charge a European customer 1000 EUR, payable at the end of month. Let’s assume that on that day, EUR/USD rate is 1.05, so the amount payable to you is 1050 USD. Now consider that on January 31th, EUR/USD rate goes up to 1.10, increasing the amount payable to 1100 USD. So the end-of-month currency revaluation gains you 50 USD, which should then be recorded as income.

Setting up currency revaluation

To be able to perform currency revaluation in 1C:Drive:

1. Go to Settings > Cash management.
2. Under Currencies, select the Foreign exchange accounting checkbox.

To specify when currency revaluation is performed:

1. Go to Settings > Cash management.
2. Under Currencies, specify Foreign currency revaluation periodicity. You have the following options:
   • Each transaction. When this option is selected, currency revaluation is performed:
     • Upon posting any business document that contains foreign currency amounts.
       It applies to currency amounts in the document and in other documents affected by it.
       For example, when you post a bank payment received for a sales invoice, revaluation will affect foreign currency amounts both in the sales invoice and in the previous bank payments for it, but not in any other sales invoices.

       AND

     • During month-end closing procedure.
       It applies to all currency amounts that exist at the end of month, regardless of when they were registered.
       For example, if a sales invoice was registered several months ago but it is not yet fully paid, the outstanding debt amount will be revaluated.
   • On month-end closing. When this option is selected, currency revaluation is only performed during month-end closing procedure.
     It applies to all currency amounts that exist at the end of month, regardless of when they were registered.
     For example, if a sales invoice was registered several months ago but it is not yet fully paid, the outstanding debt amount will be revaluated.

Note. The fact of currency exchange rate fluctuation by itself does not trigger currency revaluation. Even if exchange rates change daily, currency revaluation is only performed at the end of month (or upon posting a document with currency amounts, if Each transaction option is selected).

Methodology

The currency revaluation procedure performs the following steps:

1. The revaluation scope is determined:
   • If triggered by posting of a business document, currency revaluation procedure applies to all documents affected by that document.
     For example, when you post a bank payment received for a sales invoice, revaluation applies to the currency sales invoice and any previous bank payments for it, but not other sales invoices.
   • If triggered by the month-end closing procedure, currency revaluation applies to all documents registered in that month.

   Note. There are two exceptions to this rule. To learn more, see Notes below.

2. For each foreign currency amount in each document within the scope, the exchange rate difference is calculated according to the formula:

   Exchange rate difference = (Foreign currency amount × Exchange rate as of document date) - Presentation currency amount,
   where values of all parameters are taken from the document.

3. Each calculated exchange rate difference is recorded to one or more applicable accumulation registers:
   • Cash balance
   • Cash in cash registers
   • Payroll
   • Advance holders
   • Customer balance
   • Supplier balance
   • Loans
   • Funds transfers being processed
   • Retail value of goods (RIM)
   • Miscellaneous payable

   Note. For some documents, exchange rate differences can be recorded to different registers, depending on the document context, such as its Operation and other details.

   For example, when you post Cash receipt with Operation = Payment from customer, exchange rate differences are recorded to Cash balance and Customer balance registers. And when you post Cash receipt with Operation = Loan repayment by counterparty, exchange rate differences are recorded to Cash balance and Loans registers.

4. The calculated exchange rate differences are recorded to Foreign exchange gains and losses information register, for reference purposes.
   Note. This step only applies if currency evaluation is triggered by the month-end closing procedure.
5. Totals of calculated exchange rate differences, broken down by income/expense, are recorded to Income and expenses accumulation register, where:
   • Income and expense item = Foreign exchange loss or Foreign exchange gain
   • GL account = 6080200 Foreign exchange loss or 4020100 Foreign exchange gain
6. Totals of calculated exchange rate differences, broken down by currency and by income/expense, are recorded to Accounting journal entries accounting register.

Affected documents

1C:Drive supports currency revaluation for the following business documents:

• Account sales from consignee
• Account sales to consignor
• AR/AP adjustments
• Bank payment
• Bank receipt
• Bank reconciliation
• Cash receipt
• Cash voucher
• Credit note
• Customs declaration
• Debit note
• Expense claim
• Fixed asset sale
• Foreign currency exchange
• Internal cash transfer
• Inventory transfer
• Landed costs
• Online payment
• Online receipt
• Payroll
• Product return
• Retail revaluation
• Sales invoice
• Sales slip
• Shift closure
• Subcontractor invoice issued
• Subcontractor invoice received
• Supplier invoice

Revaluating advances

In 1C:Drive, advances are never revaluated upon document posting, even if Foreign currency revaluation periodicity is set to Each transaction. Revaluation of advances is only performed during month-end closing, using the exchange rates of the last day of that month.

1C:Drive supports month-end revaluation of advances affected by the following documents:

• Sales invoice
• Supplier invoice
• Subcontractor invoice issued
• Subcontractor invoice received
• Account sales from consignee
• Account sales to consignor
• Fixed asset sale
• Landed costs

Notes

1. For documents that record exchange rate differences to Miscellaneous payable register, revaluation is always performed upon document posting and never during month-end closing, regardless of Foreign currency revaluation periodicity.
2. For documents that record exchange rate differences to Retail value of goods (RIM) register, revaluation is never performed during month-end closing, regardless of Foreign currency revaluation periodicity. So, when Foreign currency revaluation periodicity is set to On month-end closing, revaluation for these documents is never performed at all.

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