Currency translation differences
For each foreign exchange entity, a currency translation difference is calculated. The difference derives from the use of different currency rate types for different accounts.
The calculation of the currency translation difference is based on the closing rate. The balance sheet is created on the assumption that the underlying rate is the YTD closing rate. However, individual accounts require a better presentation of different rates, such as the YTD average rate or historical rate. Each calculated actual group value is compared with a group currency value that was calculated with the YTD closing rate. If there is a difference, then a translation adjustment is calculated for each account. The total sum of all translation adjustments is recognized in a designated translation difference account.
To view detail reports for the value of each account, select and then select one of these options:
Financial Consolidation uses two accounts to show the translation difference. One account shows the difference that derives from the profit and loss. The other account shows the difference that derives from the balance sheet. Those two accounts together represent the total currency translation difference of a particular period.
Before you present the currency differences, you must configure those two accounts in Business Modeling.