23 Understanding Currency Restatement Methods

This chapter contains the following topics:

Section 23.1, "Currency Restatement Methods"

23.1 Currency Restatement Methods

Most organizations that use multiple currencies perform some method of restatement at the end of each period. Currency restatement is typically used to convert financial information into the currency of a parent company or into a stable currency for consolidations and reporting purposes. With currency restatement, you can restate amounts into:

A different currency at the transaction level. This is called detailed currency restatement and is useful for you if the company is operating in highly inflationary economy because it enables you to maintain a second set of transactions in a stable currency for reporting purposes.
A different currency at the balance level. This is called balance restatement and is useful for restating balance amounts into another currency that is used for reporting purposes.

The same currency using an exchange rate associated with a specific date, as if that rate and date applied to all transactions. This is called as if currency restatement and it eliminates fluctuations in exchange rates over a period of time for comparison purposes.

Note:

Indexed allocations enable you to restate amounts from one currency to another for consolidated reporting; however, you should use one of the currency restatement methods instead of allocations. Rounding problems occur when you use indexed allocations to convert and restate amounts.

Before you set up companies for currency restatement, determine which method you use for reporting and governmental requirements.

Currency restatement involves recalculating amounts from one currency to another currency. The primary objective is to produce consolidated reporting across companies and currencies. If you are not required to produce consolidated reports, you might not have to set up the system for currency restatement.

The JD Edwards EnterpriseOne Multicurrency Processing system provides three currency restatement methods. You can use one, two, or all three methods for a company, as described in this table:

Restatement Method	Description
Detailed currency restatement	Use this method if either of these conditions apply: The company operates in a highly inflationary economy. This method enables you to maintain a second set of transactions in a stable currency for reporting purposes. For example, by restating transactions from Colombian pesos (COP) to U.S. dollars (USD), a Colombian company can generate meaningful comparisons of current to historical amounts by using the more stable U.S. dollar. The company has to maintain transactions in two base currencies in the F0911 table for all accounts or a range of accounts. This situation means that for every domestic transaction, a transaction in an alternate currency exists. Detailed currency restatement records are posted to the F0911 table. If you use detailed currency restatement, you must have adequate disk space to handle the increased number of records in the F0911 table. You specify whether a company uses detailed currency restatement in the Company Names & Numbers program (P0010).
Balance restatement	Use this method to complete consolidated financial reports based on balances in the F0902 table. Balance currency restatement records are updated in the F0902 table. The balance restatement method restates balances into a single currency for consolidated reporting purposes. For example, by restating U.S. dollars to Canadian dollars, you can consolidate reporting with other Canadian companies. You identify the computation ID for balance restatement for each company in the Company Names & Numbers program, or in a processing option when you run the Compute Restated Balances program (R11414). If you enter a computation ID in the processing option, it overrides the ID set up for the company in the Company Names & Numbers program.
As if restatement	Use this method if the company has to eliminate fluctuations in currency exchange rates over a period of time for comparison purposes. As if restatement restates account balances using a single exchange rate. For example, by reposting U.S. dollar transactions using a single exchange rate, a Canadian company doing a project in France can compare actual income and expenses against budgeted amounts for a year ago. You cannot use as if restatement for consolidations.

Restatement Method

Description

Detailed currency restatement

Use this method if either of these conditions apply:

The company operates in a highly inflationary economy. This method enables you to maintain a second set of transactions in a stable currency for reporting purposes. For example, by restating transactions from Colombian pesos (COP) to U.S. dollars (USD), a Colombian company can generate meaningful comparisons of current to historical amounts by using the more stable U.S. dollar.
The company has to maintain transactions in two base currencies in the F0911 table for all accounts or a range of accounts. This situation means that for every domestic transaction, a transaction in an alternate currency exists.

Detailed currency restatement records are posted to the F0911 table. If you use detailed currency restatement, you must have adequate disk space to handle the increased number of records in the F0911 table.

You specify whether a company uses detailed currency restatement in the Company Names & Numbers program (P0010).

Balance restatement

Use this method to complete consolidated financial reports based on balances in the F0902 table. Balance currency restatement records are updated in the F0902 table.

The balance restatement method restates balances into a single currency for consolidated reporting purposes. For example, by restating U.S. dollars to Canadian dollars, you can consolidate reporting with other Canadian companies.

You identify the computation ID for balance restatement for each company in the Company Names & Numbers program, or in a processing option when you run the Compute Restated Balances program (R11414). If you enter a computation ID in the processing option, it overrides the ID set up for the company in the Company Names & Numbers program.

As if restatement

Use this method if the company has to eliminate fluctuations in currency exchange rates over a period of time for comparison purposes.

As if restatement restates account balances using a single exchange rate. For example, by reposting U.S. dollar transactions using a single exchange rate, a Canadian company doing a project in France can compare actual income and expenses against budgeted amounts for a year ago.

You cannot use as if restatement for consolidations.

23.1.1 Example: Currency Restatement

This diagram shows a consolidation of three companies that operate in different parts of the world:

Figure 23-1 Example of currency restatement for multiple currencies

Description of ''Figure 23-1 Example of currency restatement for multiple currencies''

The Colombian company, which operates in a highly inflationary economy, uses detailed currency restatement. The American and Belgian companies use balance currency restatement. In this example, GP is a user-defined ledger type for Generally Accepted Accounting Principles (GAAP) adjustments.