Revaluations - UK only

When you allocate foreign currency transactions with different exchange rates, Sage automatically posts revaluation transactions to correct the difference.

The transaction type for the revaluation depends on the VAT scheme, the VAT value, the exchange rate difference and whether it's a gain or a loss to the company.

This article explains what revaluation transactions post in each circumstance, to get started, from the tabs below choose whether you're working with customers or suppliers.

Standard VAT - Exchange rate gain

On Standard VAT, if you allocate a sales invoice to a transaction which has a lower exchange rate, this is an exchange rate gain. This is recorded as a sales invoice to the revaluation nominal code.

NOTE: The date of the revaluation is the same date as the sales receipt, or when allocating existing transactions, the date shown in the Customer Receipt window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SI	4000 - Sales	€100.00	2.0	£50.00
SR	1201 - Bank	€100.00	1.5	£66.67

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SI	7906 - Revaluations	N/A	N/A	£16.67

VAT Cash Accounting - Exchange rate loss

On VAT Cash Accounting, if you allocate a sales invoice to a transaction which has a higher exchange rate, this is an exchange rate loss.

No VAT on the transactions

If there's no VAT on the transactions, this is recorded as a sales credit to the revaluation nominal code in the same way as Standard VAT.

NOTE: The date of the revaluation is the same date as the sales receipt, or when allocating existing transactions, the date shown in the Customer Receipt window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SI	4000 - Sales	€100.00	1.5	£66.67
SR	1201 - Bank	€100.00	2.0	£50.00

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SC	7906 - Revaluations	N/A	N/A	£16.67

VAT on the transactions

If there's VAT on the transactions, the following revaluation transactions are posted:

• A sales invoice to correct your sales tax on the VAT Return, because even though you've received less you must pay the VAT value on the invoice. This invoice affects only the revaluation nominal code and the debtors control account.
• A sales credit to correct the debtors control account and revaluation nominal codes.

NOTE: The date of the revaluation is the same date as the sales receipt, or when allocating existing transactions, the date shown in the Customer Receipt window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
SI	4000 - Sales	€120.00	1.5	£66.67	T1	£13.33	£80.00
SR	1201 - Bank	€120.00	2.0	£50.00	T1	£10.00	£60.00

On VAT Cash Accounting the sales receipt is picked up on the VAT Return rather than the sales invoice. In the above example the VAT Return is incorrect by £3.33, therefore the following revaluations are posted:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
SI	7906 - Revaluations	N/A	N/A	£16.67	T1	£3.33	£20.00
The SI corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the invoice £40.00. This is because if there hadn't been VAT on the transaction it would have posted a credit note to correct the exchange rate difference not an invoice. Therefore the following is posted:
SC	7906 - Revaluations	N/A	N/A	£40.00	T9	£0.00	£40.00

These four transactions impact the nominal ledger in the following way:

Transaction	Nominal code	Nominal code name	Debit	Credit
SI	4000	Sales		£66.67
	1100	Debtors control account	£80.00
	2200	Sales tax control account		£13.33
SR	1200	Bank	£60.00
	1100	Debtors control account		£60.00
The sales tax control account shows the correct amount, however as it's VAT Cash Accounting the VAT Return shows the VAT value on the sales receipt and this value is incorrect. To correct this value Sage must post a sales invoice. However this revaluation sales invoice doesn't impact the tax control account.
SI	7906	Revaluations		£20.00
	1100	Debtors control account	£20.00
The SI corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the invoice £40.00.
SC	7906	Revaluations	£40.00
	1100	Debtors control account		£40.00

The final balances on the nominal codes are:

Nominal code	Nominal code name	Debit	Credit
4000	Sales		£66.67
1100	Debtors control account	£0.00
2200	Sales tax control account		£13.33
1200	Bank	£60.00
7906	Revaluations	£20.00
Total		£80.00	£80.00

VAT Cash Accounting - Exchange rate gain

On VAT Cash Accounting, if you allocate a sales invoice to a transaction which has a lower exchange rate, this is an exchange rate gain.

No VAT on the transactions

If there's no VAT on the transactions, this is recorded as a sales invoice to the revaluation nominal code in the same way as Standard VAT.

NOTE: The date of the revaluation is the same date as the sales receipt, or when allocating existing transactions, the date shown in the Customer Receipt window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SI	4000 - Sales	€100.00	2.0	£50.00
SR	1201 - Bank	€100.00	1.5	£66.67

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
SI	7906 - Revaluations	N/A	N/A	£16.67

VAT on the transactions

If there's VAT on the transactions, the following revaluation transactions are posted:

• A sales credit to correct your VAT Return, because even though you've received more you must pay the VAT value on the invoice. This invoice affects only the revaluation nominal code and the debtors control account.
• A sales invoice to correct the debtors control account and revaluation nominal codes.

NOTE: The date of the revaluation is the same date as the sales receipt, or when allocating existing transactions, the date shown in the Customer Receipt window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
SI	4000 - Sales	€120.00	2.0	£50.00	T1	£10.00	£60.00
SR	1201 - Bank	€120.00	1.5	£66.67	T1	£13.33	£80.00

On VAT Cash Accounting the sales receipt is picked up on the VAT Return rather than the sales invoice, therefore in the above example the VAT Return is incorrect by £3.33, therefore the following revaluations are posted:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
SC	7906 - Revaluations	N/A	N/A	£16.67	T1	£3.33	£20.00
The SC corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the credit £40.00. This is because if there hadn't been VAT on the transaction it would have posted an invoice to correct the exchange rate difference not a credit. Therefore the following is posted:
SI	7906 - Revaluations	N/A	N/A	£40.00	T9	£0.00	£40.00

All four transactions impact the nominal ledger in the following way:

Transaction	Nominal code	Nominal code name	Debit	Credit
SI	4000	Sales		£50.00
	1100	Debtors control account	£60.00
	2200	Sales tax control account		£10.00
SR	1200	Bank	£80.00
	1100	Debtors control account		£80.00
The sales tax control account shows the correct amount, however as it's VAT Cash Accounting the VAT Return shows the VAT value on the sales receipt and this value is incorrect. To correct this value Sage must post a sales credit. However this revaluation sales credit doesn't impact the tax control account.
SC	7906	Revaluations	£20.00
	1100	Debtors control account		£20.00
The SC corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the credit £40.00.
SI	7906	Revaluations		£40.00
	1100	Debtors control account	£40.00

The final balances on the nominal codes are:

Nominal code	Nominal code name	Debit	Credit
4000	Sales		£50.00
1100	Debtors control account	£0.00
2200	Sales tax control account		£10.00
1200	Bank	£80.00
7906	Revaluations		£20.00
Total		£80.00	£80.00

Suppliers

Standard VAT - Exchange rate gain

On Standard VAT, if you allocate a purchase invoice to a transaction which has a higher exchange rate, this is an exchange rate gain. This is recorded as a purchase credit to the revaluation nominal code.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	5000 - Purchases	€100.00	1.5	£66.67
PP	1201 - Bank	€100.00	2.0	£50.00

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PC	7906 - Revaluations	N/A	N/A	£16.67

Standard VAT - Exchange rate loss

On Standard VAT, if you allocate a purchase invoice to a transaction which has a lower exchange rate, this is an exchange rate loss. This is recorded as a purchase invoice to the revaluation nominal code.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	5000 - Purchases	€100.00	2.0	£50.00
PP	1201 - Bank	€100.00	1.5	£66.67

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	7906 - Revaluations	N/A	N/A	£16.67

VAT Cash Accounting - Exchange rate gain

On VAT Cash Accounting, if you allocate a purchase invoice to a transaction which has a higher exchange rate, this is an exchange rate gain.

No VAT on the transactions

If there's no VAT on the transactions, this is recorded as a purchase credit to the revaluation nominal code in the same way as Standard VAT.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	5000 - Purchases	€100.00	1.5	£66.67
PP	1201 - Bank	€100.00	2.0	£50.00

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PC	7906 - Revaluations	N/A	N/A	£16.67

VAT on the transactions

If there's VAT on the transactions, the following revaluation transactions are posted:

• A purchase invoice to correct your purchase tax on the VAT Return. This invoice only affects the revaluation nominal code and the creditors control account.
• A purchase credit to correct the creditors control account and revaluation nominal codes.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
PI	5000 - Purchases	€120.00	1.5	£66.67	T1	£13.33	£80.00
PP	1201 - Bank	€120.00	2.0	£50.00	T1	£10.00	£60.00

On VAT Cash Accounting the purchase payment is picked up on the VAT Return rather than the purchase invoice. In the above example the VAT Return is incorrect by £3.33, therefore the following revaluations are posted:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
PI	7906 - Revaluations	N/A	N/A	£16.67	T1	£3.33	£20.00
The PI corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the invoice £40.00. This is because if there hadn't been VAT on the transaction it would have posted a credit note to correct the exchange rate difference not an invoice. Therefore the following is posted:
PC	7906 - Revaluations	N/A	N/A	£40.00	T9	£0.00	£40.00

All four transactions impact the nominal ledger in the following way:

Transaction	Nominal code	Nominal code name	Debit	Credit
PI	5000	Purchases	£66.67
	2100	Creditors control account		£80.00
	2201	Purchase tax control account	£13.33
PP	1200	Bank		£60.00
	2100	Creditors control account	£60.00
The sales tax control account shows the correct amount, however as it's VAT Cash Accounting the VAT Return shows the VAT value on the sales receipt and this value is incorrect. To correct this value Sage must post a sales invoice. However this revaluation sales invoice doesn't impact the tax control account.
PI	7906	Revaluations	£20.00
	2100	Creditors control account		£20.00
The SI corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the invoice £40.00.
PC	7906	Revaluations		£40.00
	2100	Creditors control account	£40.00

The final balances on the nominal codes are:

Nominal code	Nominal code name	Debit	Credit
5000	Purchases	£66.67
2100	Creditors control account		£0.00
2201	Purchase tax control account	£13.33
1200	Bank		£60.00
7906	Revaluations		£20.00
Total		£80.00	£80.00

VAT Cash Accounting - Exchange rate loss

On VAT Cash Accounting, if you allocate a purchase invoice to a transaction which has a lower exchange rate, this is an exchange rate loss.

No VAT on the transactions

If there's no VAT on the transactions, this is recorded as a purchase invoice to the revaluation nominal code in the same way as Standard VAT.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	5000 - Purchases	€100.00	2.0	£50.00
PP	1201 - Bank	€100.00	1.5	£66.67

The following revaluation is posted:

Transaction type	Nominal code	Foreign value	Exchange rate	Sterling value
PI	7906 - Revaluations	N/A	N/A	£16.67

VAT on the transactions

If there's VAT on the transactions, the following revaluation transactions are posted:

• A purchase credit note to correct your purchase tax on the VAT Return. This credit affects only the revaluation nominal code and the creditors control account.
• A purchase invoice to correct the creditors control account and revaluation nominal codes.

NOTE: The date of the revaluation is the same date as the purchase payment, or when allocating existing transactions, the date shown in the Supplier Payment window.

 

Example

If you've the following transactions:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
PI	5000 - Purchases	€120.00	2.0	£50.00	T1	£10.00	£60.00
PP	1201 - Bank	€120.00	1.5	£66.67	T1	£13.33	£80.00

On VAT Cash Accounting the sales receipt is picked up on the VAT Return rather than the sales invoice, therefore in the above example the VAT Return is incorrect by £3.33, therefore the following revaluations are posted:

Transaction type	Nominal code	Foreign gross value	Exchange rate	Sterling base net	Tax code	Sterling VAT	Sterling gross value
PC	7906 - Revaluations	N/A	N/A	£16.67	T1	£3.33	£20.00
The SC corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the credit £40.00. This is because if there hadn't been VAT on the transaction it would have posted an invoice to correct the exchange rate difference not a credit. Therefore the following is posted:
PI	7906 - Revaluations	N/A	N/A	£40.00	T9	£0.00	£40.00

All four transactions impact the nominal ledger in the following way:

Transaction	Nominal code	Nominal code name	Debit	Credit
PI	5000	Purchases	£50.00
	2100	Creditors control account		£60.00
	2201	Purchase tax control account	£10.00
PP	1200	Bank		£80.00
	2100	Creditors control account	£80.00
The sales tax control account shows the correct amount, however as it's VAT Cash Accounting the VAT Return shows the VAT value on the sales receipt and this value is incorrect. To correct this value Sage must post a sales credit. However this revaluation sales credit doesn't impact the tax control account.
PC	7906	Revaluations		£20.00
	2100	Creditors control account	£20.00
The SC corrects the VAT Return but now nominal codes 7906 and 1100 are incorrect by double the gross value of the credit £40.00.
PI	7906	Revaluations	£40.00
	2100	Creditors control account		£40.00

The final balances on the nominal codes are:

Nominal code	Nominal code name	Debit	Credit
5000	Purchases	£50.00
2100	Creditors control account		£0.00
2201	Purchase tax control account	£10.00
1200	Bank		£80.00
7906	Revaluations	£20.00
Total		£80.00	£80.00