more-arw search

Q&A Forum

Currency Translation Adjustment Question

ranjit kumar's Profile

Hi, I have critical issue. Can I get the answer for the below? Some of our activity that should be posting to Currency Translation Adjustment (account 100400) is posting to Foreign Exchange Gain / Loss (account 700100) instead. Can you tell us why the activity is posting this way and how make this activity post to Currency Translation Adjustment. we are having an issue where in India, transactions that take place solely in INR are hitting our 700100 Foreign Exchange account on the P&L. Below is a billing from INR to US. The billing was done in INR , and they were paid in INR . There should be no foreign exchange. The way SAP handles consolidation is every transaction is in at a historical rate, and then converted at month-end to a CTA account. That is why we see the difference in LC2 (USD). We see the billing at one rate, and the payment at another rate. The difference between the two should not hit foreign exchange, but should instead hit CTA. How to configurr and to allow transactions like this to hit foreign exchange? Thanks in Advance. Kumar

Answers

Anonymous
(Controller) |

In general, I think you need to consult someone locally who understands your systems.

For the billing item (billed in INR/paid in INR), it sounds like the system is not treating INR as your functional currency if it is computing an Fx gain/loss.

Regarding this sentence: "We see the billing at one rate, and the payment at another rate. The difference between the two should not hit foreign exchange, but should instead hit CTA." I'm not sure I agree. The settling of transaction level activity would generally be P&L. CTA arises from the conversion of the balance sheet from one currency to another due to the difference in conversion methodologies for accounts on the balance sheet (either at spot or historical rates).

1643 views
Products and Companies

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.