Financial Consolidation rates

lally

Hi All ,

when it comes to Consolidation in the Navision , we need to take the closing rate for balance sheet accounts and average rate for P& L accounts .

Can any one explain what does it mean by Closing rate and average rate and how to consider these rates ? :-k

Thanks in advance

lally

Any help ?

lally

Any updates ?

jglathe

Hi lally,

lally wrote:

Hi All ,

when it comes to Consolidation in the Navision , we need to take the closing rate for balance sheet accounts and average rate for P& L accounts .

Can any one explain what does it mean by Closing rate and average rate and how to consider these rates ? :-k

Thanks in advance

it depends a little on the version you're using. If it is >3.70, it's more complicated. I will try to describe the current state.

In Table 220 (Business Unit), there are several fields for defining these exchange rates:

Income Currency Factor: This is the average rate you assign for the consolidation of PnL accounts.
Balance Currency Factor: This is the closing rate you assign for the consolidation of balance accounts.
Last Balance Currency Factor: This is the closing rate assigned the last time you used in the last run, regardles of the period you're actually consolidating. It is used to adjust the previous periods for the new balance exchange rate.

All those assigned rates are defined by the accountant as parameters for the consolidation.

Currency Exchange Rate Table: This is the location of the exchange rates table for historical rates (loans, equity). "Local" means the company you're doing the consolidation in, "Business Unit" is the table in the source company.

To get a hint on how this is used and how it plays with the "Consol. Translation Method" field in the G/L Account, I would suggest a look in CU 432 "Consolidate", function "CreateAndPostGenJnlLine". It is fairly non-intuitive (and the online help is not always helpful), but you can do a consolidation in NAV.

with best regards

Jens

Consolite24

Hi,

In addition some words about the (accounting) logic behind this way of work :

1/ your balance sheet is a picture at a given moment. Therefore, you take a single (closing) exchange rate at the moment of the picture (e.g. Dec 31st). Think about your cash position in foreign currency here.

2/ your Profit & Loss (P/L) accounts are generated over a given period of time, like three, six or twelve months. Therefore, these should be converted at the average rate of that period (or, even better but not often done, at separate monthly rates). So, think here about your revenues/sales invoices in foreign currency, generated over three months. Using an average rate is the best (accounting) way of converting these foreign amounts to your own base currency.

All the best!

Regards,

Martin - Consolite24

Consolite24

P.S. In some cases, specific historical rates are also used (e.g. for equity or assets).