Translating Parent Entities Using a Blended FX Rate from Children

Tax Reporting now includes new translation settings that allow parent entities (including Total Pillar Two) to be translated using a blended (dynamic) FX rate. This blended FX rate is calculated based on the sum of the translated reporting currency values of the child entities.
The blended approach reflects child-level translation differences, including:

  • Entity FX rates
  • FX amount/rate overrides
  • Weighted Average Rate (WAR)
  • Periodic translation methodology
  • Ownership (when enabled)

This also supports translating the Total Pillar Two parent entity from Pillar Two currency to reporting currency using a blended FX rate derived from the sum of the translated reporting currency values of its children.

New Tax Settings

The following settings are now available for entity currency and Pillar Two currency translation in the new Tax Settings screen (Application: Tax Settings) under Tax Settings: Translation and Tax Settings: Pillar Two:

Translation

  • Translate parent entities using a blended FX rate dynamically derived from the sum of the translated values of its children (entity currency to reporting currency)
  • While translating copy parent currency to reporting currency when they are the same (no translation applied)

Pillar Two

Translate the Total Pillar Two parent entity using a blended FX rate dynamically derived from the sum of the translated reporting currency values of its children (Pillar Two currency to reporting currency).

Note: To use this feature, you must migrate to the new Tax Settings screen. See also: Managing Tax Settings and Available Tax Settings in Administering Tax Reporting.

Business Benefit: This update improves parent-level reporting currency tie-outs when child entities use different FX translation rates and/or translation methods.

Key resources