Currency Differences contra account

Currency differences are calculated and posted to a Currency Differences contra account.

For every Operations Management transaction (for every reconciliation area), LN provides a separate integration document type for the mapping of the currency differences. The transaction type used to post the currency differences must be of the Journal Vouchers category.

All postings on the Invoice Accrual account are made in the transaction currencies. Therefore, if you run the Calculate Currency Differences (tfgld5201m000) session when you close a financial period, these transactions are included in the process. Differences between the receipt amount and the invoice amount due to rate changes between the receipt date and the approval date of the invoice are posted to a separate contra account for currency differences on the invoice accrual.

These rules apply to the Currency Differences contra accounts:

  • A unique contra account is linked to each ledger account on which the transaction currency can be different from the home currencies. When you create such a ledger account, for example, a WIP account or a cash account, you must define the Currency Differences contra account for the ledger account.
  • The Currency Differences contra account must have the same parent account as the account to which it is linked.
  • The Currency Differences contra account must be a Statutory account of the Balance Sheet type. As the account is a control account, you cannot create manual transactions on the account.
  • In the Chart of Accounts (tfgld0508m000) session, on the Dimensions tab, the settings of the Currency Differences contra account must match the corresponding settings of the newly created ledger account to which it is linked. If they do not match, LN will prompt you to make the settings match. Provided that the Integration Account check box is unavailable, the same (new) account can be used as contra account as well. In that case, the dimension options can be selected as required.

Some examples of accounts that require a Currency Differences contra account are:

  • From the integrations: WIP accounts and GDNI accounts.
  • Internally in Financials: bank accounts, cash accounts, and so on.

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