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IC elimination without differences per transaction currency

Former Member
0 Kudos

Hello everybody,

I have a question concerning BCS elimination. I'm not sure if I fully comprehend the posting because the system calculates other differences than I expected.

We didn't activate the option that differences shall be calculated per transaction currency (our companies only report local currency). So it's not possible to split the differences - that's OK. Now we have the following situation:

Contract: 1000 GBP in march 2010 (exchange rate: 1 GBP = 1,20 EUR)

Company A has GBP for local currency, company B converted the amount into their local currency EUR using the current exchange rate.

Company A: +1000 GBP

Company B: +1200 EUR

Both filled the field for transaction currency with 1000 GBP (they shouldn't but they did).

9 Months later they report the amounts in their local currency. The current exchange rate has changed: 1 GBP = 1,10 EUR. Our group currency is EUR.

So currency translation calculates

Company A: 1100 EUR

Company B: 1200 EUR (no calculation)

Now the elimination starts:

Partner ¦ TC ¦ LC ¦ GC

A ¦ 1000 GBP ¦ 1000 GBP ¦ 1100 EUR

B ¦ 1000 GBP ¦ 1200 EUR ¦ 1200 EUR

I expected the elimination to calculate a difference of 100 EUR in group currency but it didn't show any difference at all. It seems that the calculation bases upon transaction currency but I didn't activate that?! I expected that the elimination calculates the whole difference but isn't able to split into currency diff. and other differences. So it should post the whole amount as other differences. Am I wrong?

Best regards,

Sabine

Accepted Solutions (0)

Answers (5)

Answers (5)

Former Member
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Indeed the exchange rate indicated in elimination method is used to calculate the GC amounts on the fly. We use this function in reconciliation: the currency translation didn't necessarily run yet but we want to compare the amounts in GC anyway. Of course only the other differences are being calculated. We don't see currency differences in reconciliation.

While reading your message I realized that there was a mistake in my test cases #1 and #2. Nevertheless every company reports TC = LC the elimination recalculates the amounts with the exchange rate of the elim. method instead of using the values currency translation has computed. I just didn't see this because the exchange rate in my elimination was identical to the rate of currency translation. So also in these cases elimination only calculates the other difference and ignores the real differences in GC.

If I don't indicate an exchange rate in elim. method BCS is forced to use the GC values calculated by currency translation. The real differences (currency+other) are processed.

So I deduct that

- if I don't want TC to be used to calculate differences I mustn't indicate an exchange rate in elim. method and don't activate "diff per TC" option

-> reconciliation shows the differences in TC but they are not subject of limit check because GC amount is missing (-> I should use a method with exch.rate but without TC flag)

-> elimination ignores TC values and calculates the real differences (but without split, whole amount is posted as other diff.)

- if I want TC to be used to calculate differences I have to indicate an exchange rate in elim. method and tick TC split option

-> reconciliation shows the other differences in TC and GC but of course no currency differences

-> elimination splits the real difference into currency diff. and other diff.

This is not exactly what is described in the F1-text you have posted. For the combination no TC diff. flag + different TC's an exchange rate is required but elimination also works properly if the currency translation has already calculated GC amounts.

I think I know how to configure the methods now. I can't use one method in both elimination and reconciliation because in reconc. I need the exchange rate to calculate the GC amounts but in elim. I mustn't indicate an exchange rate.

Thank you so much for your support!

Former Member
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So here are my test cases (TC option unticked):

1.) Both companies report only LC and GC -> system fills TC during upload with LC value (breakdown type 2 - required breakdown: entry is forced , default allowed)

result: elimination works, differences are being calculated right

2.) Both companies report TC, LC and GC and TC = LC

result: elimination works, differences are being calculated right

3.) Both companies report TC, LC and GC and TC of company A = TC of company B

result: elimination calculates only the differences of TC amounts but not the (real) differences in GC

I tried every test with postings on level 00, 01 and 10.

If I try case 3 with activated TC option differences are being calculated right (and of course splitted).

Maybe it has something to do with my document type: key figures are TC and GC.

Or it's an error - I'm just not sure if my expectations are right. But it doesn't make much sense to perform a group measurement based only on TC instead of GC. What do you think?

former_member209721
Active Contributor
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I have just realized that in my former projects, my customers who reported the TC amounts always activated the TC option to disclose the differences linked to currency translation. So maybe, there is a system behaviour that I don't know when you report TC but do not use it in difference calculation.

Anyway, I have investigated a little bit more about your issue, and I was just deducting that if your case is correct, the system necessarly performs a currency translation on the fly, because, as you confirmed, it doesn't take in consideration the GC amounts available in the totals, and re-translate virtually the TC amounts in GC.

Based on this hypothesis, the only way of doing this is to use the Echange rate indicator set up in the interunit elimination method (should be closing rate for you, i-e 1,1). And if you press F1 on this Exch rate ind, you'l find the following information:

Exch.Rate Ind. for Translation During Reconciliation/Elim.

Determines the exchange rate indicator that is used to translate reconciled or eliminated values from transaction currency to group currency.

Use

If you include transaction currency values in the reconciliation or elimination, the specified exchange rate indicator can be used to translate these values to one or more group currencies.

Dependencies

Whether translationand thus the entry of an exchange rate (E/R) indicatoris necessary depends on (a) whether "Per Transaction Currency" is selected, and (b) how the initial data is structured:

Data does not Data

have uniform has a uniform

trx currency trx currency

Indicator E/R Ind. E/R Ind.

not selected required optional

Indicator E/R Ind. - with splitting of differences: required E/R

selected required E/R - without splitting of differences:

E/R ind. optional

Recommendation: Specify an exchange rate indicator if the method is to account for values in transaction currency.

Former Member
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Yes I'm absolutely sure about the GC values in list of total sums. I checked it once again. I'm even not able to book the currency translation for company B because it's not applicable. The currency translation always uses the periodic LC value as source key figure in our method.

I've posted some additional test cases where I checked every step. If I activate the option differences per transaction currency in the elimination method the differences are being calculated right (100 EUR). If I deactivate this option the system works like I have described.

former_member209721
Active Contributor
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There must be an element missing in your case, because the TC option should only help the system to split the difference b/w CT diff and other diff, not impact the general logic of the elimination process. Normally, the system should only take the amounts in GC that are in the totals.

1) Where are the totals records coming from : only from posting level 00? No additional documents (PL01 or 10) that has corrected the GC amounts? 2) What happens if you do the following test : report only the LC and GC with the TC option unticked and perform the elimination

Former Member
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Technically we eliminate periodic values - the document type is without inversion. We have no carry-forward and the closing is only once a year. So there is no difference between cumulative and periodic. But it posts in transaction currency and group currency. It's because we use this document type in several versions. It's a two-sided elimination with steps (but I think this doesn't matter).

The problem occurs in financial planning. We have the same chart of accounts and the same document type like in actual closing but we don't use TC for elimination. So the system fills the TC amount with the LC value during upload if the companies don't report anything (breakdown type of TC fields is "Required Breakdown: If blank, the default value is used").

I'll try again to make the postings clear:

March 2010: bilateral contract without BCS

Contract: 1000 GBP exchange rate: 1 GBP = 1,20 EUR

Company A has GBP for local currency, company B converted the amount into their local currency EUR using the current exchange rate. Both record the transaction in their local accounting.

Company A: +1000 GBP (TC), +1000 GBP (LC)

Company B: -1000 GBP (TC), -1200 EUR (LC)

December 2010: The companies upload their data to SEM-BCS.

Nothing has changed, they report the values of local accounting.

Company A: +1000 GBP (TC), +1000 GBP (LC)

Company B: -1000 GBP (TC), -1200 EUR (LC)

Currency translation calculates the group currency (EUR) for company A using the current exchange rate 1 GBP = 1.10 EUR. For partner B LC = GC, the value for GC is equivalent to LC (no variance allowed):

Company A: +1000 GBP (TC), 1000 GBP (LC), *1100 EUR (GC)*

Company B: -1000 GBP (TC), -1200 EUR (LC), -1200 EUR (GC)

Now elimination starts:



Balances    ¦              ¦              ¦                ¦               ¦              ¦
            ¦Balance A (TC)¦Balance B (TC)¦Total Diff. (TC)¦.Balance A (GC)¦Balance B (GC)¦Total Diff. (GC)
1.10000 /1:1¦              ¦              ¦                ¦               ¦              ¦
Account 1   ¦         1000 ¦              ¦           1000 ¦          1100 ¦              ¦           1100
Account 2   ¦              ¦         1000 ¦           1000 ¦               ¦         1100 ¦           1100

The posting looks like this:


Company         Account         TC       Amount GC
B               Account 2       EUR      1100
A               Account 1       EUR      1100-
B               Clearing Bal.   EUR      1100-
A               Clearing Bal.   EUR      1100
B               Profit Balance  EUR      1100
A               Profit Balance  EUR      1100-
B               Profit P&L      EUR      1100-
A               Profit P&L      EUR      1100

The system doesn't use the original GC amount for company B but calculates it based on the TC amount.

Please let me know if you need more details.

Thanks for your help!

Sabine

former_member209721
Active Contributor
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About these records :

Company A: +1000 GBP (TC), +1000 GBP (LC), +1100 EUR (GC)

Company B: -1000 GBP (TC), -1200 EUR (LC), -1200 EUR (GC)

Are you 100% sure that this is what you have in the list of totals records? please check once again

In your case, I agree that there is no difference calculated by the system, but the elimination is done in GC (not in TC), which is correct. I agree, it is like the system has translated the TC amount in GC with the exchange rate of 1.10 (instead of LC into GC). One hypothesis would be that the source key figure in the currency translation is the TC amount. That's why I ask you to check what is the GC amount in the list of totals records (not what the companies are supposed to have declared)

former_member209721
Active Contributor
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What is exactly the elimination document posted by the system ? (please provide the detailed log).

Do you eliminate in periodic or Cumulative?

9 months later, is there any variance in the local currency amount or did this amount not change (your case is not very clear)?

But whatever your case, if you do not use the Transaction currency option, the system should not pay attention to the amounts declared in TC and just reconcile the amounts in GC.

dan_sullivan
Active Contributor
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I agree wit COLLETT that more details would be helpful for us to assist. But, I am not aware that eliminations can be anything other than cumulative.

What are the document type settings?

former_member209721
Active Contributor
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Yes, it can be in cumulative or periodic depending on the "invesion" property you have set up in the doc type property

No inversion = periodic

inversion = cumulative