Notes on Translating Owners' Equity Accounts
General Ledger translates owners' equity accounts according to SFAS #52 (U.S.), using historical rates or amounts.
Suggestion: Historical rates tend to be more precise than period-end rates with respect to owners' equity accounts. Therefore, if you translate your owners' equity accounts without defining a historical rate, General Ledger warns you that it used a calculated or period-end rate to perform translation. If you receive such a warning, we suggest that you define a historical rate and retranslate your balances using that rate.
See: Automatically Assigned Rate Types
General Ledger uses one of two translation rules, depending on the account type being translated. You can choose to use either of these rules to translate owners' equity. If you do not choose a rule, General Ledger uses the Period-to-Date rule.
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Revenue and Expense
| Period-to-Date (PTD) Rule:
PTD (xlt) = Rate X PTD (func)
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Assets and Liabilities:
| Year-to-Date (YTD) Rule:
YTD (xlt) = Rate X YTD (func)
where (xlt) = translated currency
(func) = functional currency
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To choose the translation rule to use for owners' equity accounts:
1. Review the setting for the profile option GL: Owners Equity Translation Rule. There are two possible settings:
PTD: Owners' equity is translated using the Period-to-Date rule.
YTD: Owners' equity is translated using the Year-to-Date rule.
Note: If you do not maintain historical rates in your set of books, General Ledger will create them for each period for which you translate your owners' equity accounts, using:
- Period-average rates if you use the PTD rule.
- Period-end rates if you use the YTD rule.
2. Have your system administrator set the profile option to the method your organization uses for translating owners' equity.
Restating Balances Previously Translated with the Year-to-Date Rule
Older versions of General Ledger always translated owners' equity accounts using the Year-to-Date rule. If you subsequently switch to the Period-to-Date rule, your owners' equity accounts will be translated using this rule for new translations only. Previously translated owners' equity balances will not change. If you wish, you can restate your previously translated owners' equity balances.
To restate your previously translated owners' equity balances using the Period-to-Date rule:
1. Purge the old translated balances for each period to be restated.
2. Change the GL: Owners Equity Translation Rule profile option to PTD.
3. For each period to be restated, use the Historical Rates window to delete the rates used to translate owners' equity accounts, as follows:
- Retained Earnings: Delete any non-historical rates.
- Other Owners' Equity accounts: Delete any period rates.
4. Run translation. Your owners' equity balances will be translated using the Period-to-Date rule.
See Also
Setting General Ledger Profile Options
Purging Archived Account Balances and Journals