Setting Up AAIs for Realized Gains and Losses on Alternate Currency Payments

The gains and losses for alternate currency payments are recorded separately from standard gains and losses and are handled by using different accounts and AAIs. These AAI items define the accounts that the system uses for realized gains and losses on alternate currency payments:

• PYxxx: Alternate currency realized gain.

• PZxxx: Alternate currency realized loss.

The system creates a gain or loss entry when the payment is post and uses the account number assigned to AAI items PY and PZ to create alternate currency gains and losses as follows:

• Creates an entry in the gain account if the amount derived by converting from an alternate currency directly to a domestic currency is greater than the amount derived by converting from an alternate currency to a foreign currency to a domestic currency.

• Creates an entry in the loss account if the amount derived by converting from an alternate currency directly to a domestic currency is less than the amount derived by converting from an alternate currency to a foreign currency to a domestic currency.

The hierarchy for AAI items PY and PZ is the same. This example shows the sequence in which the system searches for AAI item PY:

1. PYxxx. The system uses PYxxx that is associated with the company entered on the payment, where xxx is the transaction currency of the payment.

2. PYxxx. The system uses PYxxx for company 00000, where xxx is the transaction currency of the payment.

3. PYxxxx. The system uses PYxxxx that is associated with the company entered on the payment, where xxxx is the GL offset on the voucher that is paid.

4. PYxxxx. The system uses PYxxxx for company 00000, where xxxx is the GL offset on the voucher that is paid.

5. PY. The system uses PY that is associated with the company entered on the payment.

6. PY. The system uses PY for company 00000.

Note:

When you apply an alternate currency payment to a voucher, the potential exists for a slight rounding difference. A rounding difference can occur when converting amounts between a foreign and a domestic currency, or an alternate and a domestic currency. The rounding difference,              which is immaterial, occurs when the domestic currency amount applied to a voucher is different from the domestic currency amount of the payment.

Slight rounding differences are tracked in the alternate currency payment gain and loss accounts, even though the differences are not due to exchange rate fluctuations. To record rounding differences, the system creates an offset journal entry in the account associated with AAI item PY or PZ when the payment is posted.