Tuesday, September 27, 2016

Multiple exchange rates for consolidating entities




In continuation to my earlier posts on consolidation Financial accounts in AX, this post is to highlight how AX allows multiple exchange rate types and exchange rates.

While consolidating data from companies from different regions (countries) around the world, due to a local business practices and requirements the exchange rates may vary for different subsidiaries although they belong to the same umbrella.

Below is an example of how to handle such a scenario as explained below. I am using the AX Demo data for the purpose of Consolidation.


S.No
Parent Company
Subsidiaries for Consolidation
Accounting Currency
1
GLCO

USD
2

USMF
USD
3

GBSI
GBP


There is no currency conversion required from USMF to GLCO since both these currencies are in “USD”. Now for the subsidiary “GBSI”, the accounting currency is “GBP” and hence it requires conversion to “USD”.

AX provides options for the users to select the Exchange rate type for direct conversion into consolidation company. Further the users may also choose different exchange rate types for different ledger accounts. 

In my case, I wish to choose “Average” exchange rate type for conversion for Main Account types: “Balance Sheet”, “Asset” & “Liability” and “Default” exchange rate type for conversion for main account types: “Profit & Loss”, “Revenue” & “Expense”.

Navigate to Consolidations > Consolidate Online:





Enter the Basic criteria as below:




Select the Legal entities for consolidation:





Go to Currency Translation Tab and enter the following:

  •  For USMF, since the accounting currency is same “USD”, just select all accounts. Note that system is not allowing user to select the fields highlighted 


  • ·        For GBSI, select the accounts from 110110 to 399999 (Balance Sheet, Asset, Liability & Equity accounts) note that that Exchange rate type field has now become mandatory


    •  Select the Exchange rate type as “Average”
    • The Apply exchange rate from field provides 3 options to user
    o   Consolidation date: This takes the exchange rate as on consolidation date
    o   Transaction date: This takes the exchange rate as per the actual transaction date in the source system
    o   User defined rate: This option enables user to provide a custom exchange rate



    • For our example, I will proceed with “Consolidation date” as is the norm
    • To continue further, create “New” and select main accounts from “401100” to “899999” (Revenue, Expense, Profit& Loss accounts).
    • Choose the Exchange rate type as “Default”

    This is it, once the rest of the parameters are set as per requirements, click “OK” to complete the consolidation.
     

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