Currency and Calculation Types

In relation to currencies, PeopleSoft software uses terminology that is consistent with generally accepted accounting principles based on the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

Currency refers to the denomination of a monetary transaction. PeopleSoft applications use a currency code (CURRENCY_CD) to identify and track individual currencies. Although the system does not require it, it is good practice to use International Standards Organization (ISO) currency codes. PeopleSoft applications have no limits on the number of currencies that you can use.

Important currency terms are:

Term	Definition
Base currency	Primary currency in use for a business unit and is sometimes referred to as its book currency. Each business unit must have one base currency. PeopleSoft software supports multiple base currencies, each in the form of a ledger that is defined for a business unit.
European Common Currency (euro)	Common currency adopted by participating European countries (effective January 1, 1999). PeopleSoft applications enable you to use triangulation to convert currencies that newly participate in but are not yet replaced by the euro.
Foreign currency	Any currency a business unit uses other than its base currency for doing business is termed a foreign currency. Some foreign currencies are used for reporting only, some are for input only, but most are available for both input and reporting.
Functional currency	Defined in FASB 52 as "…currency of the primary economic environment in which a foreign entity operates." It should not be used as an interchangeable term for base currency. When the functional currency differs from the base currency, FASB 52 requires an additional translation (called remeasurement) from base to functional currency. Note: A similar definition is provided by IAS/IFRS 21. In IAS terminology, measurement currency is the preferred term for functional currency.
Reporting currency	Used for financial reports such as consolidated financial statements. Note: The preferred term for reporting currency using IAS/IFRS terminology is Presentation currency.

Important currency calculation types are:

Term	Definition
Exchange rate	Expresses the value of one currency in terms of another. Recognized types of exchange rates include spot (immediate), current, negotiated (discount and premium forward rates), average, and historical rates. PeopleSoft applications support any number of exchange rate types, up to 15 digits, which includes seven integers and eight decimals (7.8).
Conversion	Exchange of one currency for another currency. In PeopleSoft applications, conversion refers to expressing the value of foreign currency transactions in terms of the base currency.
Market rate	Encompasses a number of different rate types including exchange rates, interest rates, stock exchange indexes, economic indicators, and commodity prices.
Remeasurement	The process of changing the unit of measure from the base currency of a business unit to its functional currency. This is required whenever a business unit maintains its books in a currency other than the functional currency.
Translation	Expressing ledger balances in terms of another currency, such as when balances maintained in the base or functional currency are restated in terms of a different reporting currency. In the case of translation, gains and losses are recognized solely from fluctuations in the exchange rate.