Translation Differences - with effect on net income

[Former Member]

I have set up currency translation whereby:

Balance Sheet items: Closing rate

PL items: Average rate

Equities: Historical rate

Reference translation: Standard translation at average rate

Differences post to Currency Translation Reserve

My issue was, after running currency translation, the system will calculate the translation differences. The differences occured at PL, would be posted to the Currency Translation Reserve indication "Translation Differences - with effect on net income", where system will post additional entries to both Clearing Accounts in Balance Sheet and Income Statement. Our setting was that Clearing Account for Balance Sheet will be carryforward to Retained earnings for the next fiscal year, therefore this Translation Difference will affect our next fiscal year retained earnings. Practice wise, this should not be so, as the amount is al ready at the Currency Translation Reserve item (which is a balance sheet item itself).

How do I set that the translation differences from PL would not be post to the clearing accounts?

Thanks in advance.

[Former Member · Accepted solution]

Hi,

just a information how I did a workaround about this:

The opening (movement type 100) of the balance sheet item "differences of currency translation" is customized with "don't change...".

Every increase to "differences of currency translation" works with e.g. movement type 120 and will be carried forward to 100.

Maybe this is a scenario you can use...

BR

[Former Member · Accepted solution]

I had solved this issue by having rounding rules to check between P&L items with Retained Earnings.

[Former Member · Accepted solution]

thats the same for me ; )

BR

[Former Member]

Clearing accounts work when you touch P&L.

Hence, do not set any P&L accounts for translation difference. Use the B/S items.

Moreover, there is shouldn't be any C/T differences in P&L. Because all items in P&L are usually translated at one and the same method (average rate).

[dan_sullivan]

Two possibilities:

1) have different translation reserve for P&L and do not carryforward to RE

2) do not carryforward translation reserve to RE in the first place - this is typical with my projects