How does ledger conversion perform the conversion?

The function Ledger Conversion (LCN) carries out a number of different conversion tasks, depending on the conversion rules you specify. It performs these in the following order:

  1. It performs any value swaps required, for example to swap Value 1 into Value 3.
  2. It generates any values required, for example to generate Value 1 from the Value 3.
  3. If the relationship between the pivot and currency changes, it recalculates the rates.

Conversion Swap Processing

To swap values between Value 1 and Value 3, the currency codes are fixed and must be the same. So, the source and target currency codes are the same and a currency conversion is not required. For example, to swap source Value 1 (EUR) into target Value 3 (EUR).

To swap values from Value 2 into either Value 1 or Value 3, the source Value 2 amounts must all be held in the same currency. So, again the source and target currency codes are the same and a currency conversion is not required.

The number of decimal places for a currency value in the target business unit can be different to the number of decimal places defined in the source business unit. If this is the case, a warning is displayed and you can choose to continue or stop the processing.

Transferring or Converting the Rates

Ledger Conversion (LCN) deals with rates in the following manner:

Scenario Treatment of Rates
swap currencies move the rates with the transactions
swap currencies and change pivot recalculate the rates
change pivot only recalculate the rates
generate values only retrieve the rates from the daily or period rates defined
move a value to Memo remove any rates

Any invalid or missing currency rates are identified on the error report.

Note:  Where the rates are recalculated, tolerance limits are not applied.

Recalculating the Rates

If the relationship between the pivot and the transaction currency changes, the rates are recalculated for every transaction.

For example,

  1. If the pivot changes, for example from Value 1 on the source business unit to Value 3 on the target business unit, but is still attached to the same currency, the rates are not recalculated.
  2. If the pivot is attached to Value 1 in both the source and target business units, but the currency code for Value 1 changes to USD then this does constitute a change of pivot currency and the rates are recalculated.

Generating Values

To generate new transactions, Ledger Conversion (LCN) first looks up the pivot currency, and where possible uses the pivot currency as the basis for generating the new value.

If the target value to be generated is base (Value 1), and the target pivot is Value 2, then the target Value 2 (pivot) is used.

If the target value to be generated is base, and the target pivot is Value 3, then the source base currency is used.

If the target value to generated is Value 3, and the target pivot is either Value 1 or Value 2, the target pivot currency is used.

If the target value to be generated is Value 3, and the target pivot is also Value 3, then the target base currency is used.

If the target value to be generated is base and the target pivot is also base, then the source base currency is used.