Legally, G/L account transactions performed in foreign currency are recorded by being converted to Local Currency using the Exchange Rate at the date of transaction. In such cases, when the balances of G/L accounts in Local Currency are viewed at a given time, the current effect of foreign currency transactions cannot be viewed. In other words, the Local Currency balance of accounts processed in foreign currency can be more or less than the actual amount.
The calculation and posting of increases and decreases in local currency amounts of account transactions in foreign currency due to exchange rate value changes in time are called Exchange Rate Difference Calculations.
Important criteria for exchange rate difference calculations can be listed as:
- G/L accounts for which the exchange rate difference will be calculated
- Currency type of the exchange rate difference calculation
- Date range of transactions for which the exchange rate difference will be calculated
- G/L accounts under which calculated exchange rate differences will be calculated
The Exch. Rate Diff. Calculation window accessed by clicking the Exch. Rate Diff. Calculation option contains the Defaults and Filters options.
Options under the Defaults heading are used to record default information for the slip resulting from the exchange rate difference calculation.
Calculation Date: Indicates the date of which the daily exchange rate will be used for the calculation. The exchange rate value is read from the daily exchange rates file.
Slip Type: Indicates the slip type resulting from the exchange rate difference calculation. G/L slip types are listed by clicking the “…” icon, and the related type is selected.
Slip Number: Indicates the slip number resulting from the exchange rate difference calculation.
Organizational Unit: Indicates the relevant organizational unit to which the exchange rate difference slip will be related.
Line Description: Information required to be displayed on the line comments of the generated Exchange Rate Difference Slip is recorded on the Line Comment filter line as default.
The Filters option on the exchange rate difference calculation window is used to specify how and for which accounts the exchange rate difference will be calculated.
The Exchange Rate Difference Calculation filter options are:
G/L Account Code: Used to filter the G/L account(s) to which the exchange rate difference calculation will be applied. If the exchange rate difference calculation will be performed only for specific accounts, conditions are set by defining groups or ranges. Exchange rate difference is not calculated for G/L accounts for which the exchange rate difference account is not specified
G/L Account Aux. Code: Accounts to be processed in exchange rate difference calculations can also be filtered by Card Aux. Code. The filtering is performed using one of the group or range definition filters.
Organizational Unit: The exchange rate difference is calculated by processing only the transactions of the selected organizational units. This selection is made on the Organizational Units filter line.
Department Code: This filter line is used to specify the transactions performed by which department(s) will be processed for the calculation. Only the transactions performed through the departments specified on this field are scanned for each account, and the rate difference is calculated only for these transactions.
Currency: The Foreign Currency Type filter line is used to specify the transactions performed in which currency will be processed for the calculation. More than one currency type can be selected on this field. In such cases, exchange rate difference is calculated separately for each currency type.
Exch. Rate Difference Limit: If the exchange rate difference calculated in the specified Foreign Currency Type is not required to be reflected on the exchange rate difference slip when under a certain limit, an amount is specified on the Limit Exchange Rate Difference line. When the calculated exchange rate difference is below the amount specified here, the transaction is not performed.
Exchange Rate Difference Type: This filter line is used to specify the type of transactions to be processed in exchange rate difference calculations. The field contains the All, Debit and Credit options.
Once the conditions are set for the exchange rate difference calculation, the transaction is started by clicking the “Apply” button. After the calculation, the G/L slip with the type selected on the Slip Type parameter located under the Defaults heading is generated automatically. The slip date is the date specified on the Calculation Date parameter line located under the defaults heading. Calculated exchange rates are recorded under the accounts for which the calculation is performed, or the exchange rate difference account specified on the calculation record. Transactions of each calculated account are displayed on a separate line on the exchange rate difference slip. Exchange rate differences can be grouped under a single account, or a separate exchange rate difference account can be opened for each account.
The application will display a warning if the exchange rate at the date specified cannot be read from the exchange rate table or if the accounts are not processed with the specified currency type. Likewise, exchange rate difference calculations cannot be performed when a date different than the working days specified in the Administration section is entered.
Exchange rate difference is calculated by processing the exchange rate value against currency specified on the Automatic Usage field. In order to calculate the exchange rate difference with the requested type, the Foreign Currency Usage option located under the System Settings module > Default and Parameters > Organizational menu.