Translation Adjustment Accounts
When you set up computations, you can specify the GL balance sheet accounts for translation adjustments. Translation adjustments are caused by the difference between rate types and their exchange rates and are tracked in translation adjustment accounts. Depending on the type of translation adjustment, you enter an account on the Revise Company Currency Conversions form as follows:
To create translation gain and loss amounts due to different rate types (for example, average and month-end rate types), enter the account in the Translation Adjustment Account field in the header area of the form.
The system creates a balancing entry, which is necessary because of different rate types.
To create translation gain and loss amounts due to a change in the exchange rate within a period, enter the account in the Translation Adjustment Account field in the detail area of the form. This entry is used only for analysis and is not a balancing entry.
The system calculates this amount for each range of accounts that are assigned computation method 1 (cumulative balance). The system does not allow a translation adjustment account for computation method 0.
For computation method 1, the translations gains and losses are calculated according to this formula:
(prior period balance x prior period end rate) − (prior period balance x current period end rate) + (current period posting x current month average rate) − (current period posting x current month end rate) = translation adjustment amount