Currency adjustment functionality

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Posted on by Ludwig Reinhard Microsoft Employee

Hi,

I am currently setting up a company in Estonia and noticed that Dynamics AX has two additional exchange rate transaction types available in the ledger window of the GL module denominated "unrealized financial gain" and "unrealized financial loss". Unfortunately, I do not have any documentation for those features and wonder whether somebody can provide me with some additional background Information in regards to those features.

Many thanks in advance.

Ludwig

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The exchange rate that is used for customer or vendor transactions is stored with the transaction.

Realized gains or losses for currency exchanges are posted to either the legal entity of the invoice or the legal entity of the payment, depending on the option that is selected for the Post currency exchange gain or loss field in the Intercompany accounting form for the legal entity of the payment.

The following examples use these currencies:

• Payment accounting currency: EUR

• Invoice accounting currency: USD

• Payment transaction currency: DKK

• Invoice transaction currency: CAD

Currency calculations

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When settling an invoice that is entered in one legal entity with a payment that is entered in another legal entity, the transaction currency of the payment (DKK) is converted in three steps:

1. Converted to the accounting currency of the payment (EUR), using the exchange rates from the legal entity of the payment

2. Converted to the accounting currency of the invoice (USD)

3. Converted to the transaction currency of the invoice (CAD), using the exchange rates from the legal entity of the invoice

The conversion process uses the exchange rates as of the payment date. If the resulting payment amount in the transaction currency of the invoice (CAD) is equal to the invoice amount (CAD), the invoice is considered fully paid.

When the Settle open transactions form is opened from a payment journal where the payment amount was not entered, the amount to settle is calculated based on the invoices that are selected for settlement in the Settle open transactions form. The amount to settle is converted in three steps:

1. Converted to the accounting currency of the invoice (USD), using the exchange rates from the legal entity of the invoice as of the payment date

2. Converted to the accounting currency of the payment (EUR), using the exchange rates from the legal entity of the invoice as of the payment date

3. Converted to the transaction currency of the payment (DKK)

The resulting payment amount is transferred to the payment journal line when you close the Settle open transactions form.

Please refer following link for reference

technet.microsoft.com/.../gg243279.aspx

Please verify and update us if this helps you

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Daxer Persson 3,005 on at

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Unrealized financial loss/Gain will happen when you run the function "Foreign currency revaluation" in GL, AR or AP.

And the amounts posted to the specific ledger accounts.

If e.g. you send an invoice to a custoemer in EUR and accounting currency is Dollars, then the 100 EUR of hte invoice was posted to with value 140. Then if this transaction isn't settled (customer not paid yet) when you run "Foreign exchange rate" (e.g. at end of month) and the EUR/Dollar rate has change then the 10 EUR may be worth 145 and you'll a 5 dollar unrealizsed gain.

These gains/losses are reversed then the "real transaction" ie. invoice is settled.

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Ludwig Reinhard Microsoft Employee on at

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Dear all,

First of all I would like to thank you for all your comments and feedback provided so far. What I am interested in, has however not been answered probably because I did not express myself clear. To avoid any misperception I attached you a screenshot from my environment where I can identify two additional posting types for exchange rate gains/losses called "unrealized financial gain/loss". I would like to know something about those two additional posting types. Would be great if you could let me know when those accounts are hit. Many thanks and best regards,

Ludwig

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Daxer Persson 3,005 on at

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Yes, you're right. I didn't answer your question. Sorry.

Cor the two new posting types mentioned, I've never seen them before. How did you get them (they are not in (my) VPC for R3) ?

Possibly these posting types are used so in future it's possible to differentiate currency exchanges in GL from those in AR/AP?

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Ludwig Reinhard Microsoft Employee on at

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Hi, I noticed that those posting types are a country-specific feature for "EE" (Estonia). What they are doing is posting FX adjustment that are generated by the currency revaluation functionality in GL on separate ledger accounts. That's all. Cheers, Ludwig

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John Philip 230 on at

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Hi Ludwig Reinhard,

What is use of Unrealized Financial Gain/Loss? And what is the accounting impact?

Thanks,

John Philip

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