Example of Header Level Rounding

This example illustrates how header level rounding processes currency conversions and accounts for rounding differences.

Scenario

ABC Company uses euros as the ledger currency, and it receives an invoice with three line items in Norwegian krone. For this example, the conversion rate between the krone and the euro is 6.55957.

Transaction Details

The Use header level rounding Receivables system option is enabled for the applicable business unit and a Header Rounding Account is defined.

This table shows the calculations performed to convert each line amount on the invoice:

Item/Description	Amount in Krone	Conversion Rate	Amount in Euros	Comment
Paper	15.00	6.55957	2.29	rounded up
Pens	12.00	6.55957	1.83	rounded up
Envelopes	25.00	6.55957	3.81	rounded down
Subtotal	52.00	N/A	7.93	sum of items
Rounding Difference	N/A	N/A	- 0.01	N/A
Total Amount	52.00	6.55957	7.92	rounded down

Because the Use header level rounding Receivables system option is enabled, Receivables must calculate the rounding difference between the currency conversion of the total invoice amount at the header level assigned to the receivable account and the sum of the currency conversions at the line level assigned to each revenue account. This difference is placed in the designated header rounding account.

Conversion Results

Receivables first converts each line item separately from krone to euros, and then adds them together, for a total of 7.93 EUR. Receivables then separately adds the line amounts in the invoice currency (krone) and then converts to the ledger currency, for a total of 7.92 EUR.

The rounding difference of .01 is assigned to the header rounding account as defined in Receivables system options.