Unexpected Gains/Losses After running Foreign Currency Revaluation in Consolidation entity

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Posted on by MS-29042149-0

We use a consolidation entity to consolidate legal entities into one. For balance sheet accounts, we use the end of month rate, and for P&L accounts, we use the average month rate. After running the consolidation, we run the foreign currency revaluation for balance sheet accounts. We wouldn't expect any gains/losses since the transactions should already be translated with the "correct" rate. However, we still encounter quite a few gain/loss transactions after running the foreign currency revaluation.

Could anyone advise why this is happening?

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Frank Hamelly | MVP... 46,631 Moderator on at

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Why are you running FX Reval in the consolidation company? Wouldn't you do this at the operating companies and just let the transactions roll up to the consolidation company?

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MS-29042149-0 62 on at

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Hi Frank,

This was the process we have been doing for a while. We would have thought during consolidation it would pull through the transactions and calculate them at the correct exchange rate which is setup. But, we noticed only after we run FX Revaluation in the consolidation company, this is when the balances are updated to the correct values.

If we run FX revaluation right after we consolidate the transactions, we would expect there to be no results but there are transactions that get revalued.

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Frank Hamelly | MVP... 46,631 Moderator on at

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You have transactions in your consolidation company in other than reporting currency? Do you have different reporting currencies setup in your operating companies? Theoretically, reporting currency should be the same in your operating (child) companies so you can consolidate the results to one currency.

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MS-29042149-0 62 on at

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Hi Frank, in the consolidation company the reporting currency is AUD.

The four legal entities that we are consolidating to the consolidation company have the below reporting currencies:

AUD

NZD

AUD

JPN

During consolidation we have it setup for balance sheet accounts to use the consolidation close exchange rate type. For Foreign Currency Revaluation we have it setup to use the last date of the month exchange rate which should be the same as the consolidation close exchange rate. When we run consolidation, we don't expect any transactions in the Foreign Currency Revaluation, but there appear to be unrealized gain/losses even though consolidation and foreign currency revaluation uses the same rates

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Frank Hamelly | MVP... 46,631 Moderator on at

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I've never run into this scenario before as all the clients I've worked with use the same reporting currency in all companies. What if you just don't run revaluation in the Consolidation company? Apart from that, I'd open a MSFT ticket to ask them to explain the logic at play in this scenario. Could be a bug.

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