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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Foreign currency conso...
Small and medium business | Business Central, N...
Suggested Answer

Foreign currency consolidation

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Posted on by Community Member

I am about to set up a new foreign currency consolidation - parent is in USD, subs in GBP. 

It's quite a complex consolidation and I would like to just load the opening TB as at 31 December 2021 into the consolidation entity in USD, close the income statement and then load company movements from the individual entities from 1 Jan onwards. 

The only thing that worries me about this is the revaluation each month of the GBP balance sheets - do I need to have the full balance sheet balances in the consolidation (i.e. not jsut the movements from 1 Jan onwards)  for the revaluation to work correctly each month? I know that when I add the closing rate and last closing rate to the business units modules the system is doing some sort of calucation - but I can't find out what the mechanical process is. If it is taking the entire GBP balance in each account and calculating the movement between the two rates then my method above will clearly not work. 

Thanks in advance for any insight on this. 

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  • Suggested answer
    Community Member Profile Picture
    Community Member on at

    Hello,

    I am guessing you are not an Accountant. When consolidating other Companies, who are in different currency from the parent (Consolidated Company) you need to apply how the COA will be consolidated based for Currency methodology. BC performs this when you import and consolidate another Company into the Consolidated Company. To help you see the process BC accomplishes when doing Consolidation, I am attaching a Consolidation manual that will help you see the process and functionality.

    One last thing, you need BC to process the Consolidation file export that the Consolidation Company will import.

    If you have more questions, feel free to reach out.

    Hope this helps.

    Thanks,

    Steve

    7522.Consolidation.pdf

  • Community Member Profile Picture
    Community Member on at

    I am accountant with 20 years experience, you have misunderstood the question :-)

    We have set up the consolidation correctly - all the balance sheet accounts using closing rate as the translation method, which is correct. However, each month the consolidation is only pulling in the movement in the balance sheet from the prior period, when the system should actually be revaluing the whole balance. 

    My question is, how is it doing this? It is somehow using the last closing rate to remove the old balance and then replacing it with a revaluated amount using the current closing rate entered? I am trying to understand the mechanical steps that the system goes through when it uses the closing rate and last closing rate to revalue the current period balances. 

  • Suggested answer
    Community Member Profile Picture
    Community Member on at

    Hello,

    Nice talking to a fellow Accountant. There are three exchange rates that the program uses when consolidating the financial data of subsidiary companies involving foreign currency, in Business Central. They are Average Rate (Manual), Closing Rate and Last Closing Rate. These rates are used when posting entries for that specific Business Unit.

    pastedimage1651785415564v1.jpeg
    Did I answer your question.
    Thanks,
    Steve

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