This chapter contains these topics:
Companies that do business internationally are often faced with additional accounting needs. This arises from doing business in different currencies and following different reporting and accounting requirements. To process and report on transactions in multiple currencies, a company that operates internationally must do as follows:
Convert foreign currencies into the local currency
Convert different local currencies into one currency for reporting and comparisons
Adhere to regulations that are defined in the countries in which the company operates
Revaluate currencies due to changes in exchange rates
J.D. Edwards software provides the following multi-currency functionality throughout most base applications:
Conversion from one currency to another
Restatement of multiple currencies to consolidate into one currency
Revaluation of currencies due to changes in exchange rates
J.D. Edwards software handles multiple currencies by storing each currency in a different ledger, as follows:
| Ledger | Explanation |
|---|---|
| AA ledger | Domestic transactions are posted to the AA ledger. |
| CA ledger | Foreign transactions are posted to the CA ledger. |
| XA ledger | Alternate currency transactions, if used, are posted to the XA ledger. |
You can designate a specific currency for the following:
Company
Account
Address book record
You can enter all transactions in the original currency of the documents that you receive or send. You do not need to convert currencies before you enter transactions. For foreign entries, there is real-time conversion of foreign amounts to domestic amounts.
You set up the Daily Exchange Rate File to utilize the following multi-currency features:
| Feature | Explanation |
|---|---|
| Default exchange rates | When you enter a transaction, the system supplies the exchange rate from the Daily Exchange Rate File. |
| Exchange rates for individual contracts | You can specify exchange rates for individual customers and suppliers. |
| Spot rates | You can enter an exchange rate when you enter a transaction. The value that you enter overrides the exchange rate from the Daily Exchange Rate File. |
You can enter transactions that cross company and currency boundaries. The system automatically generates the multi-currency intercompany settlements.
Gain and loss recognition features include:
| Feature | Explanation |
|---|---|
| Realized gains and losses | Entries that represent exchange rate realized gains and losses are automatically created at the time of cash receipt or entry. |
| Unrealized gains and losses | You can print a report to analyze open receivables and payables for booking unrealized gains and losses at the end of the month. Optionally, you can set up your system to create these entries automatically. |
Detailed currency restatement features enable you to:
Maintain a dual set of accounting books, one in the domestic (local) currency and one in an alternate stable currency.
Restate amounts at the transaction level for a specified range of accounts.
Consolidate balance into a common currency. A user-specified ledger type determines where the system creates the new restated balances. In addition, you can set up an exchange file and conversion specifications according to standard restatement practices.
Restate all transactions to a new ledger type using one exchange rate instead of the individual rates that were associated with each transaction over the course of time. The "as of" currency repost feature eliminates the exchange rate fluctuation for financial analysis.