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Conversion / Revaluation / Translation

Translation is the process which picks up the foriegn currency balances and converts them into functional currency balances (for a particular period,SOB,etc). So basically the translation process will generate additional records in the gl_balances table. It only operates at the balances level and not on the transactions/journals level. It picks up the periods rate defined for that period.(not the daily rates). Revaluation is a process which is typically run periodically to account for the loss/gain in the foreign currency. As an ex, if there is a transaction is foreign currency and it could have gained some value due to the economic differences. So revaluation process will take notice of this and create the new journals which account for the net loss/gain. So these journal will have to posted again. Revaluation process will not update the gl_balances.

Revaluation : Period-end process where you assess value of ASSET (for example 1,000/- CASH foriegn currency .. say EUR ) according to new rates. Generally the value of your cash euro is not the same as it was the last month. So when you revalue it with new rate it gives you higher or lower value of same 1,000/- EUR. The difference is then tranfered to/from gain/loss P&L account. Actual transaction/Journal is passed to capture this transaction. EUR1,000/- @1.5 = USD1,500/-(USD is Functional Currency) as it appears on daily reports. Revaluation is done and period end rate is @1.47 Now EUR1,000/- @1.47 = USD1,470/-(USD30/- is GAIN) will be transfered to profit and loss account. Now we can BUY EUR1,000/- for only USD1,470/Translation : For Balance sheet and reporting purposes only. No journal is passed. Any FC Balance in any summary account is translated into Functional currency balance to report on balance sheet ot other reports.

GL: Difference between Conversion / Revaluation / Translation

Three key foreign currency concepts in Oracle GL are

Conversion Revaluation Translation Conversion: It refers to foreign currency transactions that are immediately converted at the time of entry to the ledger currency of the ledger in which transaction takes place. Revaluation: Revaluation adjusts liability or asset accounts that may be materially understated or overstated at the end of a period due to a fluctuation in the exchange rate between the time the transaction was entered and the end of the period Translation: Translation refers to the act of restating an entire ledger or balances for a company from the ledger currency to a foreign currency.