About Currency Translation

If the source and destination companies have different functional currencies, G/L Consolidations can convert the consolidation data to the functional currency of the destination company. This is called currency translation.

The following table shows the contents of the source currency and functional currency fields of transactions in the source ledger and the equivalent transactions created in the destination ledger, where the source and destination ledgers have different functional currencies:

	Source Ledger (CAD)			Destination Ledger (USD)
Translate	MC	Source	Functional	MC	Source	Functional
1. N/A	N	N/A	CAD	N	N/A	USD
2. N/A	N	N/A	CAD	Y	CAD	USD
3. Funct.	Y	Various	CAD	N	N/A	USD
4. Funct.	Y	Various	CAD	Y	CAD	USD
5. Source	Y	Various	CAD	N	N/A	USD
6. Source	Y	Various	CAD	Y	Various	USD

Legend: MC=multicurrency ledger

Rows 1 to 4 apply when net amounts, balances, or transactions are exported. Rows 5 and 6 apply only when transactions are exported.

Accounts for Handling Currency Rounding Differences

In addition to transferring the account balances you specify during a consolidation, Sage 300 may also include amounts in the following accounts in order to adhere to Generally Accepted Accounting Principles (GAAP):

• Income account to handle exchange gain due to rounding differences.
• Expense account to handle exchange loss due mainly to rounding differences.

Source Currency of Exported and Imported Transactions

Unlike account balances and net amounts, transactions exported from a multicurrency ledger retain their source currency so you can retain that information in the destination ledger.

The following table shows the source currency of transactions sent to the destination ledger under various single currency / multicurrency configurations.

In this table, the source and destination ledgers have the same functional currency.

Source Ledger			Destination Ledger
MC	Source	Functional	MC	Source	Functional
N	N/A	CAD	N	N/A	CAD
N	N/A	CAD	Y	CAD	CAD
Y	Various	CAD	N	N/A	CAD
Y	Various	CAD	Y	Various	CAD

Legend: MC=multicurrency ledger

Where both source and destination ledgers are multicurrency, transactions are created in the destination ledger with identical currency details as in the source ledger.

Where the source and destination companies have different functional currencies, G/L Consolidations can convert the consolidation data to the functional currency of the destination company.

Translating Source or Functional Currency Amount

When translating currencies from a multicurrency source ledger, you have the option to calculate the new functional currency amount from the source company’s functional currency amount or source currency amount.

If you translate the functional currency, the source ledger’s functional currency becomes the source currency in the destination ledger.

If you translate the source currency, you will retain the original source currency in the destination ledger.

There are a number of possible scenarios that can arise with regard to translations, such as:

• Different rates are applicable to different transactions exported to the destination ledger (arising from different rate types for different accounts, or different rates on different transaction dates). See Example A: Balanced Export with Different Rate Types.
• Different rates and a partial export. See Example B: Partial Export with Different Rate Types.

Example A: Balanced Export with Different Rate Types

In this example, although the export is balanced (that is, a full export), the export process that uses the mapping table has specified that accounts 5000 and 5000-100 use the Daily Spot Rate (SP) instead of the default Monthly Average Rate (AV).

The resulting difference is thus attributable to the translation process, and G/L Consolidations creates an entry to the Gain/Loss currency translation accounts.

Account	Source Ledger (ZAR)	Rate Type	Rate Date	Conversion Rate	Destination Ledger (USD)
5000	12,000	SP	15-Jun-XX	R3=$1	4,000
5000-100	(6,000)	SP	20-Jun-XX	R2=$1	(3,000)
5000-200	(4,000)	AV	30-Jun-XX	R4=$1	(1,000)
5000-300	(2,000)	AV	30-Jun-XX	R4=$1	(500)
Total	0			Subtotal	(500)
				Gain/Loss Acct entry		500
				Total	0

Legend: R=ZAR; $=USD

Example B: Partial Export with Different Rate Types

The following example includes both an unbalanced (partial) export and different rates. In this case, G/L Consolidations differentiates between the entry needed to balance the export (Unit Balancing account) and any entry generated due to a gain/loss on translation (Gain/Loss on Translation accounts).

The process applies an exchange rate (dependent on which option you selected in Export Setup) to the value that is determined as the balancing amount in the source company’s functional currency, which is then posted to the Unit Balancing account. The resulting difference relates to the Gain/Loss on translation and is reflected in the Gain/Loss accounts.

Account	Source Ledger (ZAR)	Rate Type	Rate Date	Conversion Rate	Destination Ledger (USD)
5000-100	(6,000)	SP	20-Jun- XX	2:1	(3,000)
5000-200	(4,000)	AV	30-Jun-XX	4:1	(1,000)
5000-300	(2,000)	AV	30-Jun-XX	4:1	(500)
Total	(12,000)			Subtotal	(4,500)
Bal. Acct	12,000	AV	30-Jun-XX	4:1	(1) 3,000
				Subtotal	(1,500)
				Gain/Loss Acct entry		(2) 1,500
				Total	0

(1) Unit Balancing

(2) Gain/Loss on Translation