Calculations with historical rates

The calculation algorithm for H and HI rate types differs from the calculation algorithm for HS and HD rate types.

Calculations with H and HI rate types

For an account of the H rate type, these high-level steps are performed during the mass adoption process:

  1. The current period's closing rate (F) is retrieved.
  2. The base period's value is deducted from the current period's value, which results in a difference (movement).
  3. The current period's closing rate (F) is applied to the movement value.
  4. The H rate is calculated and saved.
    Note: The rate calculation is consistent regardless of whether the base and current periods are in the same year.
    Note: If an account is a Carry Forward account and the year of the base and current periods is different, the value of the Balance Sheet Profit and Loss account is added to the movement value.

For accounts of the HI rate type, the same calculations are performed as for H-rate-type accounts but separately for each intercompany. Additionally, the last step includes the calculation of the total rate across all intercompanies.

Example of mass adoption with the H rate type

After the mass adoption process is run, these steps are performed automatically:

  1. Calculating the periodical increase in the local currency balance (LCB) by subtracting the source (base) LCB from the target (current) LCB (current LCB – base LCB = periodical increase).
    Account Periodical increase
    L110100 - Share Capital 9,900,145.65 - 9,880,145.65 = 20,000
    L110400 - Consolidation Reserve 581,874.11 - 581,874.11 = 0
    Carry Forward account Periodical increase
    Different year -12355565.33262 - (-12,353,465.33262) = -2,100
    The same year 43,998,966.67 - (-12,355,565.33) = 56,354,532.00
  2. Adjusting the periodical increase by dividing it by the closing rate of the target (current) context. If the closing rate is 0, the adopted group currency balance (GCB) is also 0 (periodical increase / closing rate = adopted GCB).
    Account Adopted GCB
    L110100 - Share Capital 20,000 / 1.1 = 18,181.81818181818
    L110400 - Consolidation Reserve 0 / 1.1 = 0
    Carry Forward account Rate Adopted GCB
    Different year Jan 2032 F rate: 1.1 -2,100 / 1.1 = -1,909.090909090909
    The same year Feb 2032 F rate: 0.5 56,354,532.00 / 0.5 = 112,709,064
  3. Adding the adopted group currency balance (GCB) to the base GCB to receive a new current GCB (base GCB + adopted GCB = new current GCB).
    Account New current GCB
    L110100 - Share Capital 22,454,876.477273 + 18,181.81818181818 = 22,473,058.29545482
    L110400 - Consolidation Reserve 0 + 0 = 0
    Carry Forward account New current GCB
    Different year -16,606,401.575255 + (-1,909.090909090909) = -16,608,310.66616409
    The same year 148,090.9091 + 112,709,064 = 112,857,154.9
  4. Calculating the new H rate by dividing the current local currency balance (LCB) by the new current group currency balance (GCB). If the new current GCB is 0, the new H rate is also 0 (current LCB / new current GCB = new H rate).
    Account New H rate
    L110100 - Share Capital 9,900,145.65 / 22,473,058.29545482 = 0.4405339727171137
    L110400 - Consolidation Reserve 581,874.11 / 0 = 0
    Carry Forward account New H rate
    Different year -12,355,565.33262 / -16,608,310.66616409 = 0.7439387172466519
    The same year 43,998,966.67 / 112857154.9 = 0.3898642200309446

    As the result of the mass adoption process, the rate and local and group currency balances are calculated.

    See "Maintaining historical rates".

Example of mass adoption with the HI rate type

After the mass adoption process is run, these steps are performed automatically:

  1. Calculating the periodical increase in the local currency balance (LCB) by subtracting the source (base) LCB from the target (current) LCB (current LCB – base LCB = periodical increase).
    L300614 - Loans Due to Affiliated Entities – Current
    Intercompany Periodical increase
    External 1,234,123 - 333,000 = 901,123
    Genesis Cars 33,333 - 10,000 = 23,333
    Carry Forward account Periodical increase
    Different year -12,266,677.33262 - (-12,353,465.33262) = 86,788
    The same year 43,998,966.66738 - (-12,266,677.33262) = 56,265,644
  2. Adjusting the periodical increase by dividing it by the closing rate of the target (current) context. If the closing rate is 0, the adopted group currency balance (GCB) is also 0 (periodical increase / closing rate = adopted GCB).
    L300614 - Loans Due to Affiliated Entities – Current
    Intercompany Adopted GCB
    External 901,123 / 1.1 = 819,202.7272727273
    Genesis Cars 23,333 / 1.1 = 21,211.81818181818
    Carry Forward account Rate Adopted GCB
    Different year Jan 2032 F rate: 1.1 86,788 / 1.1 = 78,898.18181818182
    The same year Feb 2032 F rate: 0.5 56,265,644 / 0.5 = 112,531,288
  3. Adding the adopted group currency balance (GCB) to the base GCB to receive a new current GCB (base GCB + adopted GCB = new current GCB).
    L300614 - Loans Due to Affiliated Entities – Current
    Intercompany New current GCB
    External 252272.72727273 + 819,202.7272727273 = 1,071,475.454545457
    Genesis Cars 0 + 21,211.81818181818 = 21,211.81818181818
    Carry Forward account New current GCB
    Different year -16,606,401.575255 + 78,898.18181818182 = -16,527,503.39343682
    The same year -16,527,503.393437 + 112,531,288 = 96,003,784.606563
  4. Calculating the new HI rate by dividing the current local currency balance (LCB) by the new current group currency balance (GCB). If the new current GCB is 0, the new HI rate is also 0 (current LCB / new current GCB = new HI rate).
    L300614 - Loans Due to Affiliated Entities – Current
    Intercompany New HI rate
    External 1,234,123 / 1,071,475.454545457 = 1.151797733456752
    Genesis Cars 33,333 / 21,211.81818181818 = 1.57143530621866
    Carry Forward account New HI rate
    Different year -12,266,677.33262 / -16,527,503.39343682 = 0.7421978408118904
    The same year 43,998,966.66738 / 96,003,784.606563 = 0.4583045017203639

    As the result of the mass adoption process, the total rate and local and group currency balances are calculated.

    See "Maintaining historical rates".

Calculations with HS and HD rate types

For an account of the HS rate type, these high-level steps are performed during the mass adoption process:

  1. The standard rate is retrieved based on the selection of the rate and period types.
  2. For all movement schedule details selected in the Mass Adopt dialog box, the movement value is calculated in one of these ways:
    • The year of the base and current periods is the same: movement value = current period's value - base period's value
    • The year of the base and current periods is different: movement value = current period's value

    For all *_OB schedule details selected in the Mass Adopt dialog box, the movement value is calculated in one of these ways:

    • The year of the base and current periods is the same: movement value = current period's value - base period's value
    • The year of the base and current periods is different: The base period's closing balance rate is retrieved and applied to the current period.
  3. The standard rate is applied to the movement value.
  4. The HS rate is calculated and saved.
    Note: If an account is a Carry Forward account and the year of the base and current periods is different, the value of the Balance Sheet Profit and Loss account is added to the movement value.
  5. The total rate across all details is calculated.

For accounts of the HD rate type, the same calculations are performed as for HS-rate-type accounts but separately for each intercompany. Additionally, the last step includes the calculation of the total rate across all intercompanies.

The HS and HD rate types must be specified for each relevant movement for each period.

The total historical rate for the closing balance is calculated based on the individual movement calculation.

In the mass adoption function, selected exchange rate types are used to recalculate the balance in the group currencies for the relevant schedules.

These rates are available:

  • Do not adopt
  • F: Closing rate
  • A: Average rate

In combination with the rate, you must select the period type. These calculation periods are available:

  • Current period: Uses the rate of the current period.
  • Base period: Uses the rate from the base period that is defined in Business Modeling. The base period is usually period 12 of the previous year.
Note: For the mass adoption process to succeed in the target (current) period, these elements must exist in the base period for the Carry Forward (Retained Earnings) account, for example, L110511 - Post Acquisition Retained Earnings:
  • HS or HD rate
  • Local currency balance
  • Group currency balance

If the year of the base and target periods is not the same, no rate calculation is performed for schedule details, excluding the opening balance detail. During the mass adoption process, the base period's standard rate becomes the rate of the current period.

Schedule details are considered movements if they reflect transactions or adjustments that affect an account and are modified over time in account balances. For example, these schedule details can be modified over time:

  • Depreciation schedules: Show how asset values decrease over time.
  • Loan amortization schedules: Show principal and interest payments over time.
  • Inventory movement schedules: Track additions and removals of stock.
  • Accrual schedules: Track increases and reversals of expenses or revenues.

The opening balance values in the current period must match the closing balance values of the base period. Therefore, to ensure consistency, the base period's rate and local and group currency balances are applied to the opening balance detail in the current period.

If the year of the base and target periods is the same, during the mass adoption process, the actual movement is calculated by subtracting the base period's value from the current period's value. Then, the standard rate is applied to the resulting difference.

Example of mass adoption with the HS and HD rate types

Note: Mass adoption calculations are identical for HS and HD rate types. However, HD calculations are performed separately for each intercompany.

If the years of the base and target periods differ, these calculations are performed after the mass adoption process is run:

  • For the Carry Forward account:
    • The current period's local currency balance (LCB) is divided by a schedule detail's closing rate (F) for the current period. The result is the calculation of the group currency balance (GCB). For example, 7,777 (LCB) / 0.9 (rate F) = 8641.111111111110 (GCB).
      Note: If the local currency balance is not available for a schedule detail, no rate adoption is performed.
    • For the calculation of the Carry Forward account's opening balance, the selection of the rate and period types is irrelevant. After running the mass adoption process, the value of the calculated opening balance rate is independent of its corresponding local and group currency balances.

      When the mass adoption process is run, this calculation is performed: (base period's LCB of L110511 + base period's LCB of L110520 LCB) / (base period's GCB of L110511 + base period's GCB of L110520) = current period's new HS or HD rate.

      The base period's local and group currency balances of the Profit (Loss) for the Period (L110520) account are retrieved and added to the base period's corresponding balances of the Carry Forward (L110511) account. Then, the sum of the local currency balances (LCB) is divided by the sum of the group currency balances (GCB). The result is new base local and group currency balances that are used to determine the new HS or HD rate for the current period.

  • For a regular account, such as Current Portion of Liabilities from Finance Lease (L300624), this calculation is performed: current period's rate (A or F) / current period's LCB = current period's GCB.
    Note: If no adoption is performed, the existing rate, LCB, and GCB values are retained.

If the years of the base and target periods are the same, these calculations are performed after the mass adoption process is run:

  • For the Carry Forward account:

    • These calculations are performed:

      1. current period's LCB - base period's LCB = periodical increase
      2. periodical increase / current period's closing rate = adopted GCB
      3. base period's GCB + adopted GCB = current period's GCB
      4. current period's LCB / current period's GCB = HS or HD rate
    • For the calculation of the Carry Forward account's opening balance, the selection of the rate and period types is irrelevant. After running the mass adoption process, the value of the calculated opening balance rate is independent of its corresponding local and group currency balances.

      When the mass adoption process is run, this calculation is performed: (base period's LCB of L110511 + base period's LCB of L110520 LCB) / (base period's GCB of L110511 + base period's GCB of L110520) = current period's new HS or HD rate.

      The base period's local and group currency balances of the Profit (Loss) for the Period (L110520) account are retrieved and added to the base period's corresponding balances of the Carry Forward (L110511) account. Then the sum of local currency balances (LCB) is divided by the sum of the group currency balances (GCB). The result is new base local and group currency balances that are used to determine the new HS or HD rate for the current period.

  • For a regular account, such as Current Portion of Liabilities from Finance Lease (L300624), these calculations are performed:
    1. current period's LCB - base period's LCB = periodical increase
    2. periodical increase / current period's closing rate = adopted GCB
    3. base period's GCB + adopted GCB = current period's GCB
    4. current period's LCB / current period's GCB = HS or HD rate
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