Currency translation (intercompany)

Currency translation (intercompany) is the process of converting balances from one Lawson company base currency to another Lawson company base currency. Currency translation can be necessary when you have multiple companies with different base currencies and you want to produce consolidated financial statements for the companies. The balances for all companies are translated to a common currency to facilitate this process.

To use intercompany currency translation (intercompany), you must perform these setup tasks:

  • Select the Translation option on Company (GL10.1) for each company that will be translated.

  • Set up translation gain and loss accounts for the reporting (consolidated) company to which balances are translated.

  • Define one or more General Ledger companies to translate the balances into. These companies must have a Consolidated status defined on the company record.

  • If you do not want to use the default translation codes, define translation codes representing the types of rates to be used in the translation.

  • For each currency relationship and translation code, define the translation rates to be used for the year and period being translated.

Uses of currency translation (intercompany)

Currency translation is generally performed at the end of the period. For balance sheets, translation is done on year-to-date balances and auto-reversed in the next period. For income statements, all translation is done in General Ledger on period balances and accumulated from period to period. Translation currency balances are stored in a consolidated translation company that can be used for reporting. At the end of each period, the General Ledger system posts an offsetting gain or loss to a translation gain or loss account. Translation is used in the General Ledger application only.

Example

Reporting requirements might influence the decision to define one or more consolidation companies.

XYZ Corporation has offices in the United States, Germany, and France. They need to produce individual and consolidated financial statements at the end of the month for the companies. The balances in XYZ Corporation-Germany and XYZ Corporation-France are converted to US dollars using two separate consolidation companies. The balances in the consolidation companies can be reported on separately within the General Ledger application or using Report Writer. The balances in the two consolidation companies and in XYZ Corporation-US can be combined using Report Writer to produce a consolidated financial statement.