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To all using FRX, the YTD average rates calculation when translating foreign currencies does not work like it should...anyone know what I am talking about??
-Rose
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I found this blog very helpful. I got my Balance Sheet to work, however I am having an issue with the companies that have the same Functional Currency. I need to calculate Retained Earning at the CCHIST rate, however when FRx looks at GP for the Retained Earning balance, there's more than one company that uses the same GL Account for Retained Earnings. do you have any tips as to how can I calculate RE for each company
Thanks! I just replied to your private message.
f
Hi K Day,
Would you mind sharing your Excel macro with me. I need to automate the rate extraction from oanda.com.
Thanks,
Farokh
Also is it not supposed to be weighted average based on transactions......how do you get FRX to do that?
Thanks
Yes send me your email address for the document....I guess my question lies with how FAS 52 and Translation should be- how they want the average rate to be calculated......
-Rose
I see your point. So I'm just not sure that FRx does this. You mentioned an internal Microsoft document that you had. Is there any way you could pass on a link to that?
So hypothetically you are saying that you want the calculation to be (for a quarter to keep is simple) (Period 1 Balance + Period 2 Balance + Period 3 Balance) X the Average of all Daily Rates (Day1 Rate + Day 2 Rate......) / 120.
If this is the calculation you are looking for, I feel like the only way you can get FRx to handle this would be to do this outside the system and then enter the rates into FRx like how I explained it above. Calculate your new YTD weighted average and edit the rates into FRx as that rate for every period in that year. Basically, Period 1 would be some rate. Then when period 2 comes, you calculate the new rate and enter it in Period 1 and Period 2 average rate. Then for period 3, do the same thing and enter that rate in period 1, 2 and 3. You would be constantly overriding prior rates. This would not give you the right results for a trended income statement, but your YTD would be as you expected.
You might even be able to create a new FRx company and point it to a different DAX table and have on company for trended, and one for YTD.
You explained everything correctly as I am a CPA very familar with FAS 52. However like you mentined that it should be the weighted average for period and when presenting YTD Income statements or quarterly financial statements, the period is all the months YTD or for the quarter. So me this means it should be the weighted average YTD not sum of wieghted average converted months.
Do you see my point?
Thanks
I think we might be coming to a head here because I think the debate is headed towards an accounting and financial statement discussion which I can't really give any expertise. The only thing that I can add is my opinion. From what I understand, the P&L accounts are evaluated monthly against the average rate from that month. Balance sheet accounts are evaluated at a spot rate (the period ending rate for the period you are evaluating) for the most part except for certain accounts like Fixed Assets, Accumulated Depreciation and Retained Earnings that are Historical Rates. So the P&L accounts the YTD amount is actually the Sum of the Periods because they start with a beginning balance of 0.00 whereas Balance Sheet accounts are evaluated as a YTD because they carry forward a Beginning balance. This is why you can't drill into transaction detail for Balance Sheets because this balance comes in part from the year the company formed, which could be 50 years ago. So I feel YTD is a code you would want to use for Balance Sheet and CUR is what you use for P&L acconts. Conveniently, YTD will accomplish what you want if you want to see the income Statement as of a certain period of time, but it is really just the Sum of all the current period balances.
Here's what I just picked out of the FAS 52 and I added emphasis in Italics
All elements of financial statements shall be translated by using a current exchange rate.For assets and liabilities, the exchange rate at the balance sheet date shall be used (CCSPOT). For revenues,
expenses, gains, and losses, the exchange rate at the dates on which those elements are
recognized shall be used. Because translation at the exchange rates at the dates the numerous
revenues, expenses, gains, and losses are recognized is generally impractical, an appropriately
weighted average exchange rate for the period (CCAVG) may be used to translate those elements.
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