Period Close, Consolidation, and Revaluation
This domain covers the close sequence and the two currency-sensitive processes that sit inside it: revaluation and translation, plus the consolidation of multiple ledgers.
Close sequence
Subledgers close first: create accounting, transfer to GL, then GL posts, revalues, translates, consolidates where required, and closes. Period statuses are Never Opened, Open, Closed and Permanently Closed. The close monitor and period-close checklist track outstanding items.
Revaluation and translation
Revaluation restates foreign-currency balances into the ledger currency at revaluation rates, posting unrealised gain or loss to designated accounts, and is normally reversed in the following period. Translation converts balances into a reporting currency: assets and liabilities at period-end rate, revenue and expense at average rate, equity at historical rate, with the residual going to cumulative translation adjustment.
Consolidation
Balances or journals transfer from source ledgers into a consolidation ledger, where intercompany balances and matched intercompany revenue and expense are eliminated before group reporting.
Worked example
A payable of EUR 100,000 is recorded when the rate is 1.10, giving USD 110,000. At period end the rate is 1.15. Reasoning: revaluation writes the payable up by USD 5,000 and posts USD 5,000 to the unrealised loss account; the original subledger entry is untouched. If the ledger is then translated into a USD reporting currency, the resulting difference goes to CTA, not to that same loss account.
Traps
Confusing revaluation with translation; expecting revaluation to amend the original invoice; closing GL before subledgers have transferred; using the period-end rate for revenue and expense in translation.