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When you convert a foreign currency entity (Daughter) into the accounting currency of the main enitity (Mother) in Management Reporter the system uses the setup (Currency translation type) on the main accounts. Here you can choose Transaction date / (Weighted) Average / Current
- For Equity and Retained Earnings you typically select Transaction date.
- For Balance sheet accounts you typically select Current
- For P&L accounts you typically select (Weighted) Average
The P&L is converted against the average rate and the Retained Earnings are being converted against the transaction date rate.
And when you close the year, the P&L result is transferred to the Retained Earnings (transaction date is the first day of the next year).
Mother company is in USD
Daughter company is in CAD
P&L result for 2021 in CAD of Daughter company is 100 CAD. Based on Average this is calculated to 80 USD
Current exchange rate per December 31st, 2021 is 0.85
So in 2022, after the year end close, the account Retained earnings for 2021 show:
In Daughter company: 100 CAD
In Mother company: 85 USD (Because the system only has one transaction date and uses the rate as per January 1st, 2022)
And the system should capture the P&L average rate for 2021 and show 80 USD.
How should we handle this in AX2012?
You can exclude your opening and closing transactions and take transactions from both 2021 and 2022 for P&L account in MR. or you can use a shared reporting currency for both companies and use reporting currency.
It is not about including or excluding the opening balance. It is about that the system is using the incorrect rate for converting the Retained earnings opening balance in MR.
Of course, it's clear. What I mean is: do not include retained earnings in your report, instead, take PL transactions of 2021. Its a manual way but worth trying. Or you can try reporting currency.
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