freign curency valuation
To Comply the accounting standards the foreign exchange valuation is caried out on year end date.
For ExampleMy company code currency is INR, and a Export sale was made on 1st nov 2007 in terms of USD say 1000 USD,wherin the conversion rate was Say 39.50 INR. In Sundry debtors Books of accounts says sundry debtors balance with 1000 USD and Equivalent INR will be 39500.
on the Year end date say 31st December the sundry debtors is still exists for 1000 USD and say conversion rate will be Rs40.00.
Hence in books of accounts my Sundry debtors should be 40000/- ( Since my reporting date is 31.12.2007). Hence I transfer Rs 500/- to Foreign Exchange revaluation Gain/Loss account as Gain and Increase my Debtors to 40000/- in INR.
there will not be any change USD figures. And on 1st of January I reverse the entry.
the document is reversal means that 500 rs will also be reversal on 1st january