Currency translation is run from the data monitor. Currency is translated based on the currency method assigned to each consolidation unit.
The currency translation log displays the values and rates used for the calculations:
- Currency Translation Key determines whether the periodic or YTD calculation is used.
- Exchange Rate: The AVG exchange rate is used for movements and the CLO exchange rate is used for opening balance.
- Reference Exchange Rate: The Reference exchange rate is specified in customizing.
You can right-click on a column in the log such as FS Item and choose the Group option to create subtotals. One or more columns can be grouped.
CT = currency translation key. This is determined in the currency translation method. The following list are the keys that are used the most:
- 1 – Translation of cumulative local values at the exchange rate for the current period
- 5 – Translation of each period at applicable rate for the period
- 6 – No re-translation of existing group currency value
Run currency translation to translate the currency of financial statements from the local currency (LC) into the group currency (GC) so that the financial statements from local companies can be included in the group results.
In reporting, you can easily view the data before and after currency translation by displaying the local and group currency values. Also, it is useful to drill down on the currency translation adjustment (FS item 314800) to see the detail.
It is important to display subitems in currency-related reports because the translation varies for opening balance vs. changes and so forth.
When translating income statement items such as revenue, the average exchange rate is used to determine the group currency value. The currency translation adjustment is then posted to a separate FS item and subitem.
In the following animation, you can see a sample log and report for revenue currency translation.