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When foreign Bank Accounts are revalued, the net movements of the Period are compared to the opening balances.
If the account has a positive opening balance, deposits result in an unrealised variation and withdrawals result in a realised variation, as follows:
If your bank account starts in overdraft (with a zero or negative balance), the reverse of this applies.
Realised and Unrealised Balances Example - Zero Opening Balance Account
This example shows how the Variation Realised and Variation Unrealised are calculated when a CB Foreign Bank Account is revalued.
For example, start with a USD bank account with a zero balance.
Enter a deposit of $1,000 USD at an exchange rate of 0.75. Then enter a withdrawal of $750 USD at an exchange rate of 0.65. Then revalue the Bank Account at a rate of 0.8.
The transactions are as follows:
|
FX Amount |
Rate |
Base Currency Amount |
Period Opening Balance |
0 |
|
0 |
Deposit |
1000 |
0.75 |
1333.33 |
Withdrawal |
-750 |
0.65 |
-1153.85 |
Period Closing Balance |
250 |
|
179.48 |
Revaluation Rate |
|
0.8 |
|
Because the deposits are greater than the withdrawals, the net effect is a deposit. There is an unrealised variation where the bank balance has increased but money has not been spent. This will become a realised variation when the money is spent.
The Current Rate is the withdrawal exchange rate. The Withdrawal rate is used here because the opening balance is not greater than zero. It is calculated as:
Withdrawal Activity / Withdrawal Activity Bs.
= -750/-1153.85
= 0.65
The Opening Activity is calculated as:
The minimum of the - Period Opening Balance and the Deposit Activity
= Min (-0, 1000)
= 0
The Current Activity is calculated as:
The minimum of the - Withdrawal Activity and the (Deposit Activity - Opening Activity)
= Min (750, (1000 - 0))
= 750
The Current Activity Bs is calculated as:
Ratio(Current Activity , (Deposit Activity - Opening Activity)) * (Deposit Activity Bs - Opening Activity Bs)
= (750 / (1000 - 0)) * (1333.33 - 0)
= 1000
The Current Realised Bs is calculated as:
(Current Activity / Current Rate) - Current Activity Bs
= (750 / 0.65) - 1000
= 153.85
The Variation Realised Bs is calculated as:
Opening Realised Bs + Current Realised Bs
= 0 + 153.85
= 153.85
The Period Closing Balance Bs Before Revaluation is calculated as:
Period Opening Balance Bs + Deposits Bs + Withdrawals Bs
= 0 + 1333.33 +(- 1153.85)
= 179.48
The Variation Unrealised Bs is calculated as:
(Period Closing Balance / Revaluation Rate) - (Period Closing Balance Bs Before Revaluation + Variation Realised Bs)
= (250 / 0.80) - ( 179.48 + 153.85)
= - 20.83
Realised and Unrealised Balances Example - Positive Opening Balance Account
This example shows how the Variation Realised and Variation Unrealised are calculated when a CB Foreign Bank Account is revalued, on a CB Foreign Bank Account with a positive opening balance.
For example, start with a USD bank account with $250 balance.
Enter a deposit of $1,700 USD at an exchange rate of 0.75. Then enter a withdrawal of $1,250 USD at an exchange rate of 0.65. Then revalue the Bank Account at a rate of 0.8.
The transactions are as follows:
|
FX Amount |
Rate |
Base Currency Amount |
Period Opening Balance |
250 |
|
312.50 |
Period Opening Unrealised |
|
|
-20.83 |
Deposit |
1700 |
0.75 |
2266.67 |
Withdrawal |
-1250 |
0.65 |
-1923.08 |
Period Closing Balance |
700 |
|
875 |
Revaluation Rate |
|
0.8 |
|
Because the deposits are greater than the withdrawals, the net effect is a deposit. There is an unrealised variation where the bank balance has increased but money has not been spent. This will become a realised variation when the money is spent.
The Opening Rate is calculated as:
Period Opening Balance / (Period Opening Balance Bs - Period Opening Unrealised Bs)
= 250 / (312.50 - -20.83)
= 0.75
The Current Rate is the deposit exchange rate. The Deposit rate is used here because the opening balance is greater than zero. It is calculated as:
Deposit Activity / Deposit Activity Bs.
= 1700 / 2266.66
= 0.75
The Opening Activity is calculated as:
- 1 * the minimum of Period Opening Balance and (Withdrawal Activity * -1)
= - 1 * Min (250, 1250)
= - 250
The Current Activity is calculated as:
- 1 * the minimum of the Deposit Activity and ((Withdrawal Activity - Opening Activity) * -1)
= - 1 * Min (1700, (-1250 + 250)*-1)
= - 1 * Min (1700, 1000)
= - 1000
The Opening Activity Bs is calculated as:
Ratio(Opening Activity , Withdrawal Activity) * Withdrawal Activity Bs
= (-250 /-1250) * -1923.08
= -384.62
The Current Activity Bs is calculated as:
Ratio(Current Activity , (Withdrawal Activity - Opening Activity)) * (Withdrawal Activity Bs - Opening Activity Bs)
= (-1000 / (-1250 + 250)) * (-1923.08 + 384.62)
= -1538.46
The Opening Realised Bs is calculated as:
(Opening Activity / Opening Rate) - Opening Activity Bs
= (-250 / 0.75) + 384.62
= 51.29
The Current Realised Bs is calculated as:
(Current Activity / Current Rate) - Current Activity Bs
= (-1000 / 0.75) + 1538.46
= 205.13
The Variation Realised Bs is calculated as:
Opening Realised Bs + Current Realised Bs
= 51.29 + 205.13
= 256.41
The Period Closing Balance Bs Before Revaluation is calculated as:
Period Opening Balance Bs + Deposits Bs + Withdrawals Bs
= 312.50 + 2266.67 - 1923.08
= 656.09
The Variation Unrealised Bs is calculated as:
(Period Closing Balance / Revaluation Exchange Rate) - (Period Closing Balance Bs Before Revaluation + Variation Realised Bs)
= (700 / 0.8) - ( 656.09 + 256.41)
= - 37.50