WS: 11: Overview of Monetary Account Valuation (Doc ID 2455938.1)

Last updated on OCTOBER 01, 2024

Applies to:

JD Edwards World Multi-Currency - Version A7.3 cume 4 and later
JD Edwards World General Ledger - Version A7.3 cume 4 and later
Information in this document applies to any platform.

Purpose

Overview

If you work with foreign currencies and monetary accounts, you need to periodically revalue your open invoices, open vouchers, and monetary accounts to reflect current exchange rates. Monetary accounts, which are typically bank accounts, are accounts that accept only transactions in a specific currency. Monetary accounts can be bank accounts as well as other accounts such as Accounts Receivable and Accounts Payable trade accounts. You assign a currency to the account master record using Work with Revise Single Account (P09011). This limits transactions to that specific currency.

The Monetary Account Valuation program also processes accounts with blank currency codes in the F0901 table if the accounts fall within the range for AAI item PBCxx. This AAI specifies account ranges for posting by currency. Unlike accounts that are assigned a specific currency, these accounts allow balances in multiple currencies.

You revalue your open invoices, open vouchers, and monetary accounts by calculating unrealized gains and losses.

Typically, you will do this during your period-end processing. You can also revalue monetary accounts using Monetary Account Valuation program (P09415) that calculates the current domestic value of a foreign currency amount and creates journal entries for unrealized gains and losses. You can set a processing option in the Monetary Account Valuation program to create journal entries only for unrealized gains or only for unrealized loss or for both unrealized gains and losses or for realized gain/loss.

Example

Assume that the company is located in United States and its base currency is US dollars (USD). You have to pay several suppliers in Canadian dollars (CAD), so you establish a monetary bank account in CAD.

At the end of the month, you have 51,000.00 CAD in the bank account. The account balance in the actual amounts (AA) ledger is 39,616.70 USD. This account balance is based on the exchange rates of the individual transactions in the AA ledger. You must revalue the foreign bank account balance in the company currency using the exchange rate that is in effect at the end of the month, which is 1 CAD = 0.7712271 USD.

When you run the Monetary Account Valuation program, the system creates a reversing journal entry for an unrealized loss of -284.12 USD. The account balance in the AA ledger is now 39,332.58 USD. On the first day of the following month, the system reverses the journal entry and you can revalue the account again.