Translation Methods
There are two standard methods of translating an account: PVA and VAL. By default, Oracle Hyperion Tax Provision uses the VAL method.
PVA Translation Method
This method retrieves the periodic value for an account and multiplies that by the exchange rate for that period to obtain the translated amount for the current period. Then the translated amount for the current period is added to the prior period’s year-to-date (YTD) translated balance in order to calculate the YTD translated amount. The PVA method is usually applied to Income, Expense, and Flow type accounts.
VAL Translation Method
This method retrieves the YTD value in an account and multiplies that by the exchange rate. The VAL method is usually applied to Asset, Liability, and Balance type accounts.
PVA and VAL Example
The following example shows the PVA versus the VAL translation methods.
| PVA | January | February | March | (Divide) |
|---|---|---|---|---|
| Average Rate.Francs | 0.5 | 0.6 | 0.7 | |
| Income Account (Euro) | 100 | 300 | 600 | (YTD Amounts) |
| Income Account (USD) | 200 | 533 | 962 | (Translated Amount After Consolidation) |
The PVA method takes the periodic value in the INCOME ACCT and divides that by the exchange rate for that period. It then adds this result to the translated value from the prior period. It does not change the exchange rate amount or look to the prior period for the exchange rate at all. In the example above, the calculations are as follows:
January 100 / 0.5 = 200
February (300 – 100) = 200 / 0.6 = 333 + 200 (JAN) = 533
March (600 – 300) = 300 / 0.7 = 429 + 533 = 962
| VAL | January | February | March | (Divide) |
|---|---|---|---|---|
| Average Rate.Francs | 0.5 | 0.6 | 0.7 | |
| Income Account (Euro) | 100 | 300 | 600 | (YTD Amounts) |
| Income Account (USD) | 200 | 500 | 857 | (Translated Amount After Consolidation) |
Using the VAL method instead of PVA, the results would be:
January 100 / 0.5 = 200
February 300 / 0.6 = 500
March 600 / 0.7 = 857
Global FX Rates
FX rates (for example, spot and average rate) can be set globally for all entities within jurisdictions/countries. The global FX rates are used when translating all entities that are domiciled within that jurisdiction/country.