| Standard currency systemTo meet the financial and tax reporting requirements of
multinational companies with subsidiaries in many countries, the standard
currency system in LN offers: Direct translation of foreign currency
transactions Foreign currency transactions are translated
straight from the transaction currency to the local currency, without triangulation through the reference currency. By default, reporting currencies are
directly translated from the transaction currency into the reporting currency.
However, reporting currencies can also be translated from the local
currency. Integrations and multiple reporting
currencies Transactions can be recorded in one local
currency and up to two reporting currencies. Only the local currency amounts are
logged in the integration transactions, fixed assets, and reconciliation data.
Before reporting in one of the reporting currencies, reconciliation of
subledgers in the company’s local currency must take place. Adjustment of
reporting currency balances for currency differences is supported by the Calculate Currency Differences (tfgld5201m000) session, which can be run for the local
and the reporting currencies independently. For each of the home currencies the
differences will be posted in separate transactions. Reconciliation of
integration transactions on business object level is only possible in the local
currency. Multiple home currencies A home currency is the local currency, or a reporting currency used by a company
for preparing the financial statement. Amounts in foreign currency are
translated into amounts in any of the home currencies by using direct currency
rates for the local currency and, depending on the Translation Method setting in the Companies (tcemm1170m000) session, either the
transaction, or the local currency amount for the translation into the
reporting currency amounts. Currency rotation Rotate Currency functionality is available: - In General Ledger, ledger history and dimension history sessions.
- In Accounts Payable and Accounts Receivable, sessions that display information on open
items.
In these sessions, within a single company,
Rotate Currency is available for every implemented home currency. Within a
multicompany selection, Rotate Currency is available for every common currency,
using reporting currency groups. Because reporting currencies are translated
according to predefined rules and rate types, currency rates for the reporting
currencies cannot be modified during transaction entry. Currency rates retrieved from the Internet Import of currency rates from the Internet
is enabled by the ISO Currency Code field in the Currencies (tcmcs0102m000) session. To import the currency rates, you must write
your own program. LN only provides the interface. Calculation and posting of currency
differences The Calculate Currency Differences (tfgld5201m000) session can be run for each home currency
separately and independently. The currency differences calculation process also
considers the exchange rate type, specified on the ledger account, for the
local and the reporting currencies independently. Currency difference transactions are always
created for each home currency separately. The method of calculating currency
differences depends on the Translation Method setting in the Companies (tcemm1170m000) session. Interim accounts For several interim accounts, the original
posting and the account clearing posting are not transacted in the same
currency. For example, the purchase receipt / warehouse receipts that post over
the interim transit 3 account, can have different transaction currencies. The
purchase receipt may be in US dollars, whereas the warehouse receipt is always
transacted in the local currency of the warehouse. In this case, a currency
translation will take place, using the account that is defined in the Company Parameters (tfgld0503m000) session. LN will detect any difference between the transaction currencies
within a pair of debit/credit postings (one of these being the local currency
of the particular company), and automatically create the additional translation
transactions. Intercompany transactions Intercompany transactions are reconciled in
the transaction currency. For calculating the local and reporting currency
amounts in intercompany transactions, only the transaction amount is
used. If required, in the standard currency
system, intercompany accounts can be defined by transaction currency, meaning
that the transaction currency determines to which intercompany account the
transaction is posted. Chart of accounts For each financial company, reporting rate type
characteristics can be defined on ledger account level in the Ledger Account Settings by Individual Account (tfgld0128m000) session. Here, you
can set the reporting rate type to: - Adopt Transaction's Exchange Rate Type
- Own Exchange Rate Type
- Company's Default
If set to Own Exchange Rate Type, a rate type for the particular reporting currency must be
entered. If no characteristics are entered for a specific ledger
account, LN will use
the company’s default defined in the Companies (tcemm1170m000) session. Tax accounts of the same financial company
and tax origin (purchase/sales), as well as control accounts of the same
financial company and origin (supplier/customer), must have the same reporting
rate types characteristics. Therefore, reporting rate type features will be
definable on these levels as well. Use of exchange rate types To translate the transaction amount into the
local currency amount, LN uses the rate belonging to the exchange rate type specified on the
transaction. The currency rate used for the translation into the reporting
currency depends on the exchange rate type specified on the ledger account to
which it is posted. Cash transactions will typically be
translated against the spot exchange rate whereas monthly rates can be used for
inventory and work in process. Typical exchange rate types known are daily
rates, average rates, and monthly rates. The calculate currency differences process
can retrieve a rate based on the ledger account exchange rate type. Multiple reporting currencies in Accounts Payable and
Accounts Receivable The open entries in the Accounts Payable and Accounts Receivable modules are recorded in the company’s local currency and
reporting currencies. In the standard currency system, local
currency amounts are translated using the exchange rate type as specified on
the transaction. Reporting currency amounts are calculated using the exchange
rate type as specified on the control ledger account. Within a financial
company, all control ledger accounts in a business partner group must have the
same exchange rate types for the reporting currencies. Multiple reporting currencies in tax analysis and
reporting Because the same currency can be used as
home currency more than once, it is possible to choose which home currency is
used for tax analysis and which for tax declarations. This is useful to
facilitate legal compliant reporting using a specific set of rates for tax. In
the tax declaration master you can select the home currency position to be used
in the tax declaration. LN calculates reporting currency amounts
using the exchange rate type as specified on the tax ledger account. Within a
financial company, all purchase tax ledger accounts must have the same exchange
rate types for the reporting currencies. The same applies to the sales tax
ledger accounts. Write off currency differences on the ACP/ACR control
accounts LN calculates reporting currency differences
using the exchange rate type and rate as specified on the control ledger
account for each home currency. For each of the home (local and reporting)
currencies, the currency difference is posted using a separate financial
transaction. Reference currency In the standard currency system, the reference
currency: - Can be defined independently of the local and reporting
currencies.
- Can be, but does not have to be, one
of the home currencies.
- Can be used to express amounts that represent amounts
across multiple companies, for example, lot prices in Warehousing.
Reports In various print sessions data can be
selected across multiple companies. In the standard currency system, financial
reports can only be printed across financial companies that have at least one
common currency. If there is more than one common currency, choose in which
common currency the report must be printed using the appropriate reporting currency group. If no common currency exists, printing
reports across multiple companies is not possible. Logistical reports with currencies The rate type to be used in translation to
the reporting currency is also available in report sessions. Rate determiner In the standard currency system, the rate
determiner is only used to switch to manually entered rates. All other
functions of the rate determiner have been moved to the rate type. In
transaction entry sessions, the Currency Rate Determiner field will show Document Date by
default. If you want to overwrite the defaulted rate, set the rate determiner
to Manually Entered. Finalization reports Finalization reports must always be printed
in the local currency of the company of the transactions concerned. As a
result, if a batch for Company 100 contains transactions for Company 200,
Company 200 transactions are printed on a separate report page in the local
currency of Company 200. Shared balances In LN various balances are kept on the level of
an entire group of companies, for example, business partner balances and credit
limits. In the standard currency system, balances are also kept on company
level in the company’s local currency. The group company balances are either
kept in the reference currency, or in a user-definable currency. When these
balances are recalculated, they are updated in the local currency. When the
local currency is updated, the group balances are recalculated as
well.
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