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FX and Intercompany

  • 1.  FX and Intercompany

    Oracle Ace
    Posted 03-05-2021 12:14 PM
    OATUG,

    I have a requirement that I have not had before and I am having a very difficult time figuring out a solution. 

    Client is setting up operations in UK.  They are a US Company.   They have opted to observe ASC 830 by:
    1. Setting up the UK in the GBP Ledger
    2. As Intercompany will not be settled on a regular basis, they want to treat as equity which means it will translate at the PTD Average Rate which is typical for Owners Equity.  The customer is using AGIS which requires an Asset for the receivable and a liability as the Payable.  To effectuate this, we defined a very simple allocation to reclass the I/C Accounts to an Equity Account each month.  Translates exactly as the client wants. 
    3. On the US Side, AGIS transactions come over as entered, in GBP.  The issue is at month end, when we run revaluation, Oracle uses the YTD weighted average, which is not the same as what is being used in the UK Ledger and lo and behold, we have IC variances due to FX. 

    I have considered enforcing Global Currency of US, as the documentation says that eliminates the issues however the translation to get back to USD for GBP still must occur so I don't see how that helps but willing to consider.


    I have been an OATUG contributor for 20 years and never asked a question (answered quite a few) so I'd really appreciate an assist on this. I have to believe I am missing something obvious.  

    Thanks

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    Thomas Simkiss
    Director of Cloud Solutions
    Creoal Consulting
    Bethesda MD
    (844) 621-9127 x403
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  • 2.  RE: FX and Intercompany

    Posted 03-08-2021 10:05 AM

     

    Hi,

     

    May be try using Historical rate (in the historial rate screen, specify the rate which you want system to use each month during translation) for the required accounts...

     

    Regards,

    Arvind






  • 3.  RE: FX and Intercompany

    CO19 Speaker
    Posted 03-09-2021 04:45 PM
    Hi Tom.  I agree with Arvind's recommendation.  I am assuming you meant when you run Translation (not Revaluation) at month end on the US books, there is a difference?  If that is the case, you should be able to use Historical rates to drive the desired result.  The formula used for Translation is as follows:

    If Historical rate or amount is defined for the account then Historical rate or amount is used Else If account type is assets or liability then Rate used will be period end Else if account type is expenses or revenue then Rate used will be average period. Else if account type is owner's equity then If GL: Owners Equity Translation Rule is set to PTD then Rate used is Period Average Else /* GL: Owners Equity Translation Rule is set to YTD */ Rate used is Period End End if End if End if

    Hope that helps.  Give me a call if you want to discuss.  I think you still have my number :)



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    Donna DuBois
    Business Systems Analyst
    ViaSat
    Carlsbad CA
    (760) 893-1911
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  • 4.  RE: FX and Intercompany

    Oracle Ace
    Posted 03-09-2021 05:00 PM
    Historical is not going to work.   That rate is to be held constant each month (its used for acquisitions typically).

    We wound up setting up an autotamted reclass to an IC Account setup as Expense Type.  This allows us to Revalue using the PTD Avg method, same method as the UK I/C being treated as equity.  

    This is a big hole in the ERP solution for companies that don't settle Intercompany regularly and want to treat as equity.   EPM and FCCS lets you do this

    ------------------------------
    Thomas Simkiss
    Director of Cloud Solutions
    Creoal Consulting
    Bethesda MD
    (844) 621-9127 x403
    ------------------------------