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Exchange Rate difference (Purchase invoice vs. Inventory transactions)

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Posted on by Community Member Microsoft Employee

Hi all,

The user has posted a Purchase invoice from a foreign vendor with a Fixed exchange rate of 122.52, while the rate of the day from the local national bank was 122.57.

Before the invoice was posted, inventory transactions had a physical cost amount based on the exchange rate from the bank.

After the purchase invoice was posted with the fixed rate, the financial cost amount on the inventory transactions did not reflect the difference between the two rates. 

So we have a correct invoice, with the correct values converted to the primary currency, but these values are not reflected in the Inventory transactions.

We verified such behavior in all the purchases from foreign vendors. Neither the Inventory recalculation/Closing, nor the Foreign currency revaluation did change these values.

Where are these differences reflected in AX? From our verifications we did not find any entries for these values. Do they go in a specific ledger account?  How can they be corrected?

Thank you in advance,

Irida 

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Thank you Shayan for the code.

    Not exactly what I was looking for but thanks again.

    Irida

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hi Ludwig,

    I guess I agree with you. The fluctuations have been negligible so far, so no need to post a value adjustment.

    Thank you for your insight on the matter.

    Best regards,

    Irida

  • Suggested answer
    shayan arshi Profile Picture
    shayan arshi 40 on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    you may use it to find the current configured exchange rates

    shayanarshi.blogspot.com/.../retrieving-exchange-rate-in-d365-f.html

  • Verified answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hello Irida,

    If I summarize your issue then the question is whether exchange rate fluctuations should affect your stock values.

    Right?

    The answer to this question depends on the nature of the exchange rate fluctuation.

    If it is a short-term fluctuation then your auditors will say that such fluctuations don't affect inventory values.

    On the other hand, if there is a fundamental shift in exchange rates you should account for that.

    I am a fan of the first option; that is short-term fluctuations that should not be taken into consideration as you process your daily transactions.

    Why?

    In your example, there is an exchange rate fluctuation between the time your receive the items and the time the items arrive. If you continue this example further what should happen if the exchange rate fluctuates again on the day you use the items in production or on the day you sell them? Should you record subsequent adjustments? I don't think so. If there is a fundamental change in exchange rates you can consider this change through a value adjustment that is usually done at the end of the financial period (year end or half year end). I would not make such an adjustment on a monthly or quarterly basis because you never know whether the exchange rate fluctuation was just 'erratic'.

    In summary, I would not worry about those exchange rate fluctuations.

    What's your view on this?

    Best regards,

    Ludwig

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hi Ludwig,

    Thanks for clarifying that part.

    My question is, with the new exchange rate given to the Vendor invoice, shouldn't the Financial cost amount be updated in the transactions? Because if a higher rate is applied the cost of each product is increased in this case.

    How can I record (keep track of) these differences in the system, because this time I found out purely by chance. After controlling different invoices I understood that is a behavior the system has in general.

    Many thanks,

    Irida

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hi Irida,

    Many thanks for the update.

    I think that I found the 'root' issue of your question.

    If you have a look at the voucher that you shared in the first tab you can see that inventory transactions are tracked in the accounting currency only. In your case 'ALL'. Inventory is never recorded in the foreign currency (EUR in your example) and as a result, currency revaluations and subsequent corrections that you make for exchange rates don't matter in your inventory.

    Does that answer your question?

    Best regards,

    Ludwig

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hello Ludwig,

    I have added some information in the file, including the calculation of the rate in the 2 first sheets..

    Since the Financial cost amount of the inventory transactions (third sheet) includes Charges, I have added a fourth sheet with the details of the charges applied in the invoice (with the user's exchange rate).

    Tell me if you need further information.

    Many thanks,

    Irida

    6116.Voucher-and-TransOrigin.xlsx

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hello Irida,

    Many thanks for sharing the file.

    Unfortunately, I cannot identify the amounts that you mentioned above.

    Can you double check the voucher and the transactions posted?

    Many thanks,

    Ludwig

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hello Ludwig,

    Here you can find the details you were looking for.

    Voucher-and-TransOrigin.xlsx

    Thank you,

    Irida

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Exchange Rate difference (Purchase invoice vs. Inventory transactions)

    Hello Irida,

    Can you share details of the vouchers posted (including the posting types) as well as the transaction origin of those vouchers?

    Many thanks,

    Ludwig

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