Valuation of Foreign Currencies

This chapter describes the processes involved in the valuation of foreign currencies in Infor LN 10.7 for Poland localization.

According to Art. 15a of Corporate Income Tax Act, positive or negative currency differences result from received or purchased means or financial values in a foreign currency. If the value on receipt day is different from their value on payment day, that is priced according to the exchange rate is applied.

In order to enable the charging of currency differences in accordance with tax regulations, localized version of Infor LN allows to:
  • calculate currency differences using FIFO method
  • calculate currency differences based on a manual rate

According to Polish tax law, currency differences calculated based on the FIFO algorithm are recognized as realized currency differences, while currency differences calculated based on a given date are recognized as unrealized currency profit/loss and must be posted to a separate ledger account set.

Maintenance in Infor LN

To set up and calculate currency differences for foreign currencies, use the following sessions:
  • Company Parameters (tfgld0503m000)
  • Calculate Currency Differences (tfgld5201m000)

Company Parameters (tfgld0503m000): The session allows to enter profit and loss ledger accounts, 12 profit and loss dimensions, and transaction type for posting exchange rate differences calculated using FIFO method. In order to enter this data, use the Currency Diff. FIFO tab.

Reports printed from the session Print Company Parameters (tfgld0404m000) include Currency Differences FIFO fields.

Calculate Currency Differences (tfgld5201m000): The session calculates currency differences resulting from transactions posted on accounts for which the field Currency Analysis in the session Chart of Accounts (tfgld0508m000) is set to Required.

Exchange rate differences can be calculated using the methods described below:
  • FIFO Method: The system calculates exchange rate differences on the assumption that the available financial means purchased first are disposed at the beginning.

    According to Polish tax law, historical currency rates should be used to value the outcome transaction. The rates are determined on the basis of the FIFO algorithm.

    Currency differences are calculated as the difference between transaction exchange rate and the exchange rate from documents retrieved according to the FIFO algorithm.

    The results are posted to currency difference FIFO ledger accounts.

    A detailed report also presents the documents used to calculate currency differences for FIFO method.

  • Rate Date Method: The method uses the exchange rate of a given day, e.g. the last day of the year. Currency differences are calculated as the difference between transaction exchange rate and the exchange rate from exchange rate table defined according to the date entered in the field Rate Date.
  • Manual Rate Method: The method allows to specify a exchange rate table manually in the Rate Type field, provided that currency differences are calculated for a single currency.

    The Exchange Rate can be specified when the Calculation Method is set to Rate Date.