Gains and Losses and Cash-basis Accounting
If you use cash-basis accounting, you can set up individual foreign-denominated accounts so that the Gains/Losses and Revaluations process updates their cash-basis balances.
In most cases, companies consider gains and losses from the revaluation of foreign-denominated accounts as unrealized gains and losses, so those gains and losses do not affect cash-basis account balances. However, if you want DPS to post cash-basis entries for revaluation gains and losses for a foreign-denominated account, you have that option. To do that, select Update Cash Basis during Revaluation for that account in .
If you have a foreign-denominated general ledger account for which Update Cash Basis during Revaluation is selected, the following occurs when you run the Gains/Losses and Revaluations process:
- DPS calculates the account balance in terms of the functional currency. To do this, DPS uses the exchange rate in effect on the date you specify when you run the process.
- DPS compares the current balance in the functional currency to the previous balance.
- If the balance in the functional currency has changed,
DPS posts an entry for the difference as follows:
- For a gain, DPS posts to the revaluation gains account for the foreign-denominated account, if you specified one in . If you did not specify a revaluation gains account for the foreign-denominated account, DPS posts to the realized gains account in the Posting Accounts form ().
- For a loss, DPS posts to the revaluation losses account for the foreign-denominated account, if you specified one in . If you did not specify a revaluation losses account for the foreign-denominated account, DPS posts to the realized losses account in the Posting Accounts form ().
The Gains/Losses and Revaluations Detail report does not include these cash-basis entries for revaluation gains and losses for foreign-denominated accounts.