***
title: FX Revaluations
description: Learn about FX Revaluations in Fynapse.
subtitle: A guide to FX Revaluations in Fynapse.
------------------------------------------------
## What Is FX Revaluation?
FX revaluation is the process of updating balances in functional and reporting currencies to the latest FX rates. The aim of the process is to capture the value of the fluctuating exchange rates and make sure we report that fluctuation in financial statements. This is different from FX conversion which happens on the Journal amounts.
When balances are first created, they use the FX rate applicable to the Posting Date of the Journal using a pre-defined set of FX rates to derive the functional and reporting currency amounts. The aim of the revaluation process is to adjust the FX rates of Journals from balance sheet accounts on an ad-hoc basis that move balances in both functional and reporting currencies as per the FX rate shift to a designated account.
FX revaluation is performed on balances. That is, it is a revaluation of a balance, not an individual Journal.
### Why Do We Need to Perform FX Revaluation?
FX revaluation is performed to ensure the accuracy of financial statements and maintain an accurate record of what is owed and due, while factoring in foreign currency exchange rates. In certain situations, FX revaluation may be necessary to comply with tax laws.
If a company performs a financial transaction that involves a foreign currency, they are required to do a revaluation at the end of the given period. This is to ensure that records accurately reflect the realized or unrealized gain or loss, and to comply with the company’s financial reporting requirements.
If revaluation is not performed by the time the books close, a company is at risk of reporting inaccurate financial data.
For example, in the US, FX revaluation is performed to ensure compliance with Foreign Exchange reporting guidance.
The Foreign Exchange reporting guidance was first issued under the Statement of Financial Accounting Standards No. 52 (FAS52) in December 1981 and later updated by the Accounting Standards Codification Topic 830 (ASC830) in March 2013. Based on this guidance, a company is required to report as per these standards, which state that you are required to identify the functional currency of your company's economic environment (i.e., local currency) which may differ from the reporting currency (i.e., base currency).
Transactions on a company's books that are not recorded in the functional currency have to be translated to their functional currency equivalent before being translated into their reporting currency equivalent. This is intended to produce the same result as if the transactions were maintained in the functional currency to begin with. Thus, you can report on the foreign exchange exposure between functional and reporting currency as per the standard.
## FX Revaluation Process
### Input
For FX revaluation process to occur, you need the following data:
**GL Account**
FX revaluation configuration defines the rules for revaluation, i.e., determining the GL Accounts, Offset Accounts, Rate Sets, Journal Code.
FX revaluation is performed on balances. In order to aggregate balances, you need to define conditions of aggregation. These are defined on the level of Dimension Sets.
The Dimension Sets are assigned to Accounting Basis, which together with Subledger Nodes constitutes the combination to which FX revaluation configurations are assigned.
**Revaluation date**
You need to choose for which date a revaluation is run, i.e., for which date Fynapse should aggregate balances which will then be re-calculated by the FX revaluation process.
### Calculation
FX revaluation is calculated as follows:
#### Transaction Amount
No revaluation occurs for Transaction Amount. Therefore, Transaction Amount will always appear with “0” value on Journals generated by the FX revaluation process.
#### Functional Amount
The FX revaluation for functional amounts is calculated as follows:
*Transaction Balance @ Specified date \* FX Rate @ Specified date - Functional Balance @ Specified date*
Where
* FX Rate - is a rate set you defined in the Exchange Rate Entity
* source currency - transaction currency
* target currency - functional currency
#### Reporting Amount
The FX revaluation for reporting amounts is calculated as follows:
*`{basic amount for reporting currency}` @ Specified date \* FX rate @ Specified date - Reporting Amount Balance @ Specified date*
Where
* for a reporting amount calculated on the basis of the transaction currency:
* `{basic amount for the reporting currency}` is a balance for the transaction amount
* FX rate - the rate set you defined in the Exchange Rate Entity
* the source currency - the transaction currency
* the target currency - the reporting currency
* for the reporting amount calculated on the basis of the functional currency:
* `{basic amount for the reporting currency}` is a balance for the functional amount including a value of functional amount calculated in the point above
* FX rate - the rate set you defined in the Exchange Rate Entity
* the source currency - the functional currency
* the target currency - the reporting currency
### Output
The FX revaluation process creates Journals for each change in the amount caused by the revaluation process. These Journals are posted to the specified GL and Offset Accounts.
If a balance for a prior day/period changes, the FX revaluation for that balance should be re-run (for any dates for which the balance has changed), with the FX revaluation journal(s) posted to the appropriate open date (per the configuration).
**Prerequisites**
| **General Configuration** | |
| ----------------------------------------- | --------------------------------- |
| Accounting Base | IFRS17 |
| Dimension Set | Dimension\_set\_1 |
| Node | GB\_COMPANY |
| Functional Currency for Node: GB\_COMPANY | GBP |
| Reporting currency | USD |
| Calculation method of reporting amount: | On the basis of Functional Amount |
| Rate set | Basic\_rate\_set |
| **Dimension\_set\_1** |
| --------------------- |
| Posting Date |
| GL Account |
| Accounting Basis |
| Transaction Currency |
| Local Currency |
| **Accounts List** | |
| ------------------ | ----------------------------------- |
| **Account number** | **Description** |
| 100100 | Basic value of municipal bonds |
| 100101 | Incomes from municipal bonds coupon |
| 100200 | Banking account |
| 200100 | Profit/Loss from FX rate changes |
| **FX Rate Entity** | | | | |
| ------------------ | --------- | ------------------- | ------------------- | ------------ |
| **Rate set** | **Date** | **Source Currency** | **Target currency** | **FX Rate** |
| Basic\_rate\_set | 9/1/2023 | PLN | GBP | 0.2000000000 |
| Basic\_rate\_set | 9/1/2023 | GBP | USD | 1.2000000000 |
| Basic\_rate\_set | 9/15/2023 | PLN | GBP | 0.1988000000 |
| Basic\_rate\_set | 9/15/2023 | GBP | USD | 1.2300000000 |
Initial State
The following Business Event was sent to Fynapse:
| **Event** | **Company** | **Posting Date** | **Transaction Currency** | **Transaction Amount** |
| ----------------------------- | ----------- | ---------------- | ------------------------ | ---------------------- |
| Purchase\_investment\_product | GB\_COMPANY | 9/1/2023 | PLN | 10,000.00 |
This Business Event generated the following Journals:
| **Journal ID** | **Company** | **Posting Date** | **Accounting Base** | **Transaction Currency** | **Transaction Amount** | **Functional Currency** | **Functional Amount** | **Reporting Amount USD** | **Account** | **Journal Type** |
| ------------------------------------ | ----------- | ---------------- | ------------------- | ------------------------ | ---------------------- | ----------------------- | --------------------- | ------------------------ | ----------- | ---------------- |
| 03f6115f-9580-4f9c-af82-f1539f12c893 | GB\_COMPANY | 9/1/2023 | IFRS17 | PLN | 10,000.00 | GBP | 2,000.00 | 2,400.00 | 100100 | Permanent |
| 03f6115f-9580-4f9c-af82-f1539f12c893 | GB\_COMPANY | 9/1/2023 | IFRS17 | PLN | -10,000.00 | GBP | -2,000.00 | -2,400.00 | 100200 | Permanent |
Based on these Journals, the following balance was queried for Account 100100:
| **Balance date** | **Company** | **Accounting Base** | **Account** | **Transaction Currency** | **Balance (transaction amount)** | **Functional Currency** | **Functional Amount** | **Reporting amount USD** |
| ---------------- | ----------- | ------------------- | ----------- | ------------------------ | -------------------------------- | ----------------------- | --------------------- | ------------------------ |
| 9/1/2023 | GB\_COMPANY | IFRS17 | 100100 | PLN | 10,000.00 | GBP | 2000 | 2400 |
***
**An FX revaluation process was run on for the following revaluation date: 09/15/2023.**
| **Configuration of revaluation** | |
| -------------------------------- | ---------------------- |
| GL Account | 100100 |
| Offset Account | 200100 |
| Journal Code | Revaluation\_permanent |
| Revaluation date | 09/15/2023 |
Taking into account the FX rates from the FX rates for 09/15/2023:
| **Parameter** | **Amount** | **Currency** |
| ------------------ | ---------- | ------------ |
| Transaction amount | 0 | PLN |
| Functional amount | -12.00 | GBP |
| Reporting amount | 45.24 | USD |
The following Journals were created to account for currency fluctuations:
| **Journal ID** | **Company** | **Posting Date** | **Accounting Base** | **Transaction Currency** | **Transaction Amount** | **Functional Currency** | **Functional Amount** | **Reporting amount USD** | **Account** | **Journal Type** |
| ------------------------------------ | ----------- | ---------------- | ------------------- | ------------------------ | ---------------------- | ----------------------- | --------------------- | ------------------------ | ----------- | ---------------------- |
| 07d6ed1d-d164-431a-b2c5-e8cc2a0889f9 | GB\_COMPANY | 9/15/2023 | IFRS17 | PLN | 0.00 | GBP | -12.00 | 45.24 | 100100 | Revaluation\_permanent |
| 07d6ed1d-d164-431a-b2c5-e8cc2a0889f9 | GB\_COMPANY | 9/15/2023 | IFRS17 | PLN | 0.00 | GBP | 12.00 | -45.24 | 200100 | Revaluation\_permanent |
Following the adjustment, balance for account 100100 for 09/15/2023 changed to:
| **Company** | **Accounting Base** | **Account** | **Transaction Currency** | **Balance (transaction amount)** | **Functional Currency** | **Functional Amount** | **Reporting amount USD** |
| ----------- | ------------------- | ----------- | ------------------------ | -------------------------------- | ----------------------- | --------------------- | ------------------------ |
| GB\_COMPANY | IFRS17 | 100100 | PLN | 10000 | GBP | 1,988.00 | 2445.24 |
A multinational entity with branches in the UK and the US. Sometime ago this company acquired a German entity and the US branch assumed its liabilities and assets in EUR.
**Prerequisites**
| **Dimension\_set\_1** | **Dimension\_set\_2** |
| --------------------- | --------------------- |
| Accounting Basis | Accounting Basis |
| Account | Account |
| Transaction Currency | Transaction Currency |
| Local Currency | Local Currency |
| Reporting SEK | Reporting SEK |
| Region | Region |
| Financial instrument | |
| **Accounting Bases defined** | | | | | |
| ---------------------------- | ---------------------------- | ------------------------------------ | ----------------- | ------------------ | ------------------------ |
| **Name** | **Description** | **Reporting amount calculated from** | **Dimension set** | **Assigned Nodes** | **Assigned FX rate set** |
| IFRS | IFRS Financial Statements | Functional amount | Dimension\_set\_1 | GB | fx\_rate\_set |
| US\_GAAP | US GAAP Financial Statements | Transaction amount | Dimension\_set\_2 | GB, US | fx\_rate\_set\_2 |
| **Node Configurations** | | |
| ----------------------- | ------------ | ------------------ |
| **Region** | **Timezone** | **Configurations** |
| GB | Greenwich | 2 |
| US | SystemV/EST5 | 1 |
| **FX Rate Entity** | | | | |
| ------------------ | -------- | ------------------- | ------------------- | ----------- |
| **Rate set** | **Date** | **Source Currency** | **Target currency** | **FX Rate** |
| fx\_rate\_set | 3/1/2023 | GBP | SEK | 13.1856 |
| fx\_rate\_set | 3/1/2023 | EUR | GBP | 0.8568 |
| fx\_rate\_set | 3/1/2023 | EUR | SEK | 11.2974 |
| fx\_rate\_set\_2 | 3/1/2023 | USD | SEK | 10.4102 |
| fx\_rate\_set\_2 | 3/1/2023 | EUR | USD | 1.0776 |
| fx\_rate\_set\_2 | 3/1/2023 | EUR | SEK | 11.2974 |
| fx\_rate\_set | 3/2/2023 | GBP | SEK | 13.1858 |
| fx\_rate\_set | 3/2/2023 | EUR | GBP | 0.8568 |
| fx\_rate\_set | 3/2/2023 | EUR | SEK | 11.2974 |
| fx\_rate\_set\_2 | 3/2/2023 | USD | SEK | 10.405 |
| fx\_rate\_set\_2 | 3/2/2023 | EUR | USD | 1.078 |
| fx\_rate\_set\_2 | 3/2/2023 | EUR | SEK | 11.2974 |
***
**An FX revaluation process was run on for the following revaluation date: 03/02/2023.**
Taking into account the FX rates from the FX rates for 03/02/2023:
| **Configuration of Revaluation** | |
| -------------------------------- | ----------- |
| Account | 50550 |
| Offset | 500100 |
| Revaluation date | 3/2/2023 |
| Joural Type | REVAL\_PERM |
Balance queried for Account 50550 for 03/02/2023:
| **Trade Date** | **Account** | **Accounting Basis** | **Region** | **Financial instrument** | **Balance (transaction amount)** | **Transaction currency** | **Local Amount** | **Local Currency** | **Reporting SEK** |
| -------------- | ------------------------------ | -------------------- | ---------- | ------------------------ | -------------------------------- | ------------------------ | ---------------- | ------------------ | ----------------- |
| 3/1/2023 | 50550 - Liability: Revaluation | IFRS | GB | Short-term loans | 375.67 | EUR | 321.87 | GBP | 4244.05 |
| 3/1/2023 | 50550 - Liability: Revaluation | US GAAP | US | | 1527.33 | EUR | 1308.62 | USD | 17254.86 |
After revaluation based on the relevant FX rates, the following changes have to be accounted for:
| **Parameters** | **Transaction amount** | **Functional amount** | **Reporting SEK** |
| ---------------------- | ---------------------- | --------------------- | ----------------- |
| **IFRS/GB/Short-term** | 0.00 | 0.00 | 0.12 |
| **US GAAP/US** | 0.00 | 337.84 | 0.00 |
The following Journals were created to account for currency fluctuations:
| **Trade Date** | **Journal Id** | **Journal Line Id** | **Accounting Basis** | **Journal Type (Permanent / Reversing)** | **Account** | **Transaction Amount** | **Transaction Currency** | **Local Amount** | **Local Currency** | **Reporting SEK** | **Region** | **Financial instrument** |
| -------------- | ------------------------- | ----------------------------- | -------------------- | ---------------------------------------- | ------------------------------ | ---------------------- | ------------------------ | ---------------- | ------------------ | ----------------- | ---------- | ------------------------ |
| 3/2/2023 | Reval\_IFRS/GB/Short-term | Reval\_IFRS/GB/Short-term\_L1 | IFRS | REVAL\_PERM | 50550 - Liability: Revaluation | 0.00 | EUR | 0.00 | GBP | 0.12 | GB | Short-term loans |
| 3/2/2023 | Reval\_IFRS/GB/Short-term | Reval\_IFRS/GB/Short-term\_L2 | IFRS | REVAL\_PERM | 500100 | 0.00 | EUR | 0.00 | GBP | -0.12 | GB | Short-term loans |
| 3/2/2023 | Reval\_US GAAP/US | Reval\_US GAAP/US\_L1 | IFRS | REVAL\_PERM | 50550 - Liability: Revaluation | 0.00 | EUR | 337.84 | USD | 0.00 | US | |
| 3/2/2023 | Reval\_US GAAP/US | Reval\_US GAAP/US\_L2 | IFRS | REVAL\_PERM | 500100 | 0.00 | EUR | -337.84 | USD | 0.00 | US | |
Following the adjustment, balance for account Account 50550 for 03/02/2023 changed to:
| **Trade Date** | **Account** | **Accounting Basis** | **Region** | **Financial instrument** | **Balance (transaction amount)** | **Transaction currency** | **Local Amount** | **Local Currency** | **Reporting SEK** |
| -------------- | ------------------------------ | -------------------- | ---------- | ------------------------ | -------------------------------- | ------------------------ | ---------------- | ------------------ | ----------------- |
| 3/1/2023 | 50550 - Liability: Revaluation | IFRS | GB | Short-term loans | EUR | 321.87 | GBP | 4,244.11 | 4244.05 |
| 3/1/2023 | 50550 - Liability: Revaluation | US GAAP | US | | EUR | 1,646.46 | USD | 17,254.86 | 17254.86 |
## FX Revaluation Screen
The **FX Revaluation** screen allows you to perform FX revaluations.
The screen includes:
* The **Run** button - allows you to run the process
* The **Show logs** button - redirects you to the **RX Revaluation logs** screen, where you can browse information about previous FX revaluation runs.
* A grid which comprises:
* Information about **Accounting Base** and **Node** combinations and **Revaluation configurations** assigned to the given combination
* **Last run status** - the status of the process
* **Last run for** - the date for which the given revaluation was run
* **Last run at** - the timestamp for when the revaluation run was started
* **Actions** - the **Actions** column allows you to perform the following:
* **Rerun** - rerun the revaluation for the date in the **Last run for** column
* **Open journals** - redirects you to the **Journals** screen in the **Subledger**, where the system automatically runs a query based on the **Ingestion ID** of the Journals which underwent revaluation
* **View errors** - if a run is unsuccessful, you can view the errors in a pane that opens on the right-hand side of the screen.
## Tutorials
For more details on configuring FX revaluation, refer to [Multiple Currencies Configuration](/docs/processing-configuration/multiple-currencies/overview).
1. Go to **Subledger > FX Revaluation**.
2. Select the **Revaluation date**.
3. Select the Accounting Base/Subledger Node combination for which you want to run the revaluation.
You can run a revaluation for multiple selections.
4. Click the **Run** button to perform FX revaluation.