Multi-Currency
R12 General Ledger Management Fundamentals
Objectives
After completing this lesson, you should be able to do the
following:
• Define foreign currencies
• Enter foreign currency journals
• Revalue foreign currency balances
• Translate functional balances into foreign currency
• Describe how RC affects General Ledger activities
Overview of Multi-Currency
Pounds
Yen
Dollar
Euro
Foreign Currency Concepts
There are three key concepts in Oracle General Ledger that
pertain to foreign currency:
Conversion
Revaluation
Translation
Integrating with Subledgers
Foreign currency
obligation is entered in
Oracle Payables
Foreign currency
obligation is paid in
Oracle Payables
Payables journal entry
is recorded in General
Ledger
Realized foreign currency
gain or loss is calculated
Foreign currency is
revalued and the
unrealized gain or lost is
recorded
Payables journal entry
is recorded in General
Ledger
Reporting Currencies
Business Reasons
•
•
•
Useful for consolidation
•
reporting and analysis
•
No need to physically move
balances to create views of
consolidation data
Beneficial for parent
•
consolidation entities that
share the same chart of
accounts and calendar with
their subsidiaries
Benefits
Tighter link to ledgers!
For accounting and
reporting in another
currency (in addition to the
ledger's primary currency)
Can be used with Primary
or Secondary ledgers
Defining Currencies
Use the Currencies window to define and enable or disable
currencies
Conversion Overview
Oracle General Ledger converts journal amounts entered
in a foreign currency to functional currency equivalents
using daily conversion rates
Conversion
Yen
Foreign currency
Dollar
Functional currency
Conversion Example
Entered Journal Entry Lines
DR. Accounts Receivable………………….10,000 Euro
CR.
Revenue…………………………………………10,000 Euro
Foreign currency
CONVERT 1 Euro = .8 US Dollars
DR. Accounts Receivable………………….… 8,000 US$
CR.
Revenue……………………………………….….. 8,000 US$
Functional currency
Defining Conversion Rate Types
Foreign Currency
Journals
Rate Types:
–Spot
–Corporate
–User
–EMU Fixed
–User Defined
Functional Currency
Journals
Entering Daily Rates
• Rates are Shared Across Ledgers
• Loading Daily Rates Automatically
5-1-97 JPY/US SPOT .7155
5-1-97 JPY/CAD CORP .0112
Daily Rates
Revaluation Overview
Revalue account balances to reflect the change in the
foreign currency rate from the date a transaction is entered
and the reporting date
Original U.S. Receivable
1000 Euro
550 U.S. Dollars
Paris
Revalued U.S. Receivable
1000 Euro
600 U.S. Dollars
USD Unrealized Gain
50 U.S. Dollars
New York
Revaluation Process
Foreign
currencies
Functional currency
Conversion at the time of the
foreign currency transaction
Foreign
currencies
Functional currency
Revaluation at the end of
the accounting period
Running Revaluation
Revalue Foreign
Currency Balances
Post to Unrealized
Gain/Loss Account
Reverse Revaluation
Journals
Is the foreign Currency
Receivable Still Unpaid?
Yes
No
Collect Foreign Currency
Receivable
Post to Realized
Gain/Loss Account
Revaluation Example
Entered Journal Entry Lines
DR. Accounts Receivable………………….10,000 Euro
CR.
Revenue…………………………………………10,000 Euro
Convert 1 Euro = .8 US Dollars
DR. Accounts Receivable………………….… 8,000 US$
CR. Revenue……………………………………….….. 8,000 US$
REVALUE 1 Euro = .81 US Dollars
DR. Accounts Receivable………………….… 100 US$
CR. Unrealized Gain…………………………………….. 100 US$
Currency Rates Manager Description
• A new user-friendly tool to manage daily and historical
rates
• Global companies can now:
– Maintain consistency among
different conversion rates and
currencies
– Minimize imbalances during
intercompany eliminations due
to exchange rate differences
– Maintain daily rates and
historical rates more easily
Currency Rates Manager Description (continued)
Daily Rates
•
•
Upload daily rates from a
spreadsheet or enter and
maintain rates in the new
Web-interface
Cross Rate Rules
automatically calculate the
cross rates between two or
more currencies
Historical Rates
•
•
Upload and download
historical rates via a
spreadsheet
Added security prevents
uploading rates to closed
periods
Currency Rates Manager Benefits
Easy-to-Use Interface
• Enter and maintain daily rates in the new Web-interface
or spreadsheet interface
Improved Efficiency
• Quickly upload daily and historical rates from a
spreadsheet
• Copy historical rates from one ledger to another
Better Consistency
• Apply Cross Rate Rules to ensure consistency across
currency rates by automatically calculating the cross
rates between two or more currencies
Using Cross Rate Rules
The following currency rates have been defined:
Currency
Conversion
From
To
Date
Type
USD
EUR
30-Sep-03
Spot
.900252
1.1108000871
USD
JPY
30-Sep-03
Spot
116.81
.0085609109
Currency Rates Manager will calculate the
cross rate between EUR and JPY and its inverse
From
To
EUR
JPY
Date
30-Sep-03
Type
Spot
EUR
JPY JPY
129.753
EUR
.0077069509
Translation Overview
Foreign currency translation is a process that lets you
restate your functional currency account balances into a
reporting currency
Functional
Functional currency
Balance Sheet
Assets
Liabilities
100,000
60,000
Period end
Rate = 0.75
Owner's Equity
Period end
Rate = 0.75
Foreign currency
40,000
Foreign
Balance Sheet
Assets
Liabilities
75,000
45,000
Historical
Rate = 0.70
Owner's Equity
28,000
Translation
General Ledger selects translation rates based on the GL
Account Type and Translation Rate Type:
GL Account Type
Monetary Assets,
Liabilities
Non-Monetary Assets,
Liabilities
Revenue, Expense
Equity
Period-End
Period-Average
Historic
Balances and Rates Used for Translation
Account Type
Balance and Rate Used in Translation
Assets
Cumulative balance and period-end rate
Liabilities
Cumulative balance and period-end rate
Revenue
Periodic balances and period average rates
Expense
Periodic balances and period average rates
Equity
Cumulative balance and period-end rate unless
historical rates are defined for these accounts
Cumulative Translation
Adjustment Account
Japanese Yen
U.S. Dollar
Translate
Net difference to
balance translated
chart of accounts
Cumulative
Translation
Adjustment
Account
Historical Rates
• Historical Rates are a weighted average rate for
transactions that occur at different times
• Historical Rates are used to report journal entry line
amounts in the units of money that were current when
the transactions took place
• Historical balances are the opposite of inflation
adjusted balances
Translation with Historical
Rates and Amounts
• If you have defined historical rates or amounts, Oracle
General Ledger selects one of two amounts that is
used to arrive at a translated balance for your account:
– Account Balance
– Net Activity
• The amount differs depending on the type of account to
which the historical rate or amount applies:
– Revenue/Expense
– Asset/Liability
– Owner's Equity
Translating Owners' Equity Accounts
General Ledger translates owners' equity accounts in
accordance with SFAS #52 (U.S.), using historical rates or
amounts and one of the following rules:
• Period-to-Date
• Year-to-Date
Secondary Tracking Segment Description
Process, analyze and audit business units by two
segments:
• Primary Balancing Segment
• Secondary Tracking Segment
Company
Line of Bus. Department Account
Balancing Cost Center
Segment
Segment
Secondary
Tracking
Segment
Natural
Account
Segment
Subsidiary
Intercompany
Segment
Secondary Tracking Segment Description
(continued)
Each account can be tracked by unique pairs of values for
the balancing segment and secondary tracking segment
Process
Secondary
Balancing Tracking
Segment Segment
Account
Revaluation
Co
Dept
Unrealized Gains/Losses
Year End Close
Co
Dept
Retained Earnings
Translation
Co
Dept
Retained Earnings/CTA
Secondary Tracking Segment Benefits
Better Audit and Analysis
• Provides more detail to retained earnings, cumulative
translation adjustments and revaluation gains/losses
accounts
Better Control and Consistency
• Maintains consistency for similar transactions within a
ledger because this option is set at the ledger level
Greater Flexibility
• Choose any segment, except your balancing or natural
account segment, to act as the secondary tracking
segment
How to Set Up Secondary Tracking Segment
Company
Line of Bus. Department
Account
Subsidiary
Balancing
Segment
Cost Center
Segment
Natural
Account
Segment
Intercompany
Segment
Secondary
Tracking
Segment
Using Secondary Tracking Segment
The following chart of accounts structure exists:
Company
Department
Balancing
Segment
Secondary
Tracking Segment
and Cost Center
Segment
Account
Natural Account
Segment
Secondary Tracking Segment
Closing and Translation Example
Account
USD
Balance
Cumulative
Rate
Translated
YEN
01.100.Revenue
01.100.Expense
01.200.Revenue
01.200.Expense
1,000 CR
500 DR
300 CR
200 DR
135
120
140
125
135,000 CR
60,000 DR
42,000 CR
25,000 DR
Year End Close and Translation creates
accounts by pairs of segments
USD
Calculated Translated
Balance
Rate
YEN
01.100.Retained Earnings 500 CR
150
75,000 CR
01.200.Retained Earnings 100 CR
170
17,000 CR
Account
Secondary Tracking Segment
Revaluation Example
Revalued Accounts
01.100.Asset
01.100.Liability
Amount
1,000 CR
500 DR
01.200.Asset
300 DR
01.200.Liability
200 DR
Revaluation creates accounts by pairs of segments
Unrealized Gain/Loss
Accounts Generated
01.100.Unrealized Loss
01.200.Unrealized Gain
Amount
500 DR
500 CR
Automatically Assigned Rate Types
Prior
Period
Calculated
Foreign Currency Listings
Review the rates defined for any accounting period using
standard listings from the Submit Requests window
Daily Conversion Rates Listing
Historical Rates Listing
Period Rates Listing
Foreign Currency Reports
•
•
•
•
•
•
•
Foreign Currency General Ledger Report
Foreign Currency Journals Report
Foreign Currency Detail Trial Balance Report
Foreign Currency Summary 1 Trial Balance
Translation Trial Balance
Foreign Account Analysis Report
Foreign Account Analysis Report with Payables Detail
Multi-Currency Profile Options
•
•
•
•
•
GL: Income Statement Accounts Revaluation Rule
GL: Revaluation: Autoquery Last Run Ranges
GL: Owners Equity Translation Rule
Journals: Allow Multiple Exchange Rates
Journals: Display Inverse Rate
Summary
In this lesson, you should have learned how to:
• Define foreign currencies
• Enter foreign currency journals
• Revalue foreign currency balances
• Translate functional balances into foreign currency
• Describe how RC affects General Ledger activities