AX2012 ENUS FINII 05

Chapter 5: Multicurrency CHAPTER 5: MULTICURRENCY Objectives The objectives are: • Complete the setup steps that are required for foreign currency revaluation • Run foreign currency revaluation in General Ledger • Run foreign currency revaluation in Accounts Receivable and Accounts Payable Introduction Microsoft Dynamics AX® works with multiple currencies and provides several methods to meet the accounting requirements in different countries The General Ledger Setup course in the Financials I collection explains the basics of setting up currencies and exchange rates This course describes advanced currency topics, such as Foreign currency revaluation Exchange rates constantly fluctuate Therefore, Foreign currency revaluation is necessary for correct periodic accounting If you not periodically adjust to reflect the current rates, foreign amounts that you convert and post to the General Ledger, and then display in reports can be in the accounting or reporting currency amounts HINT: Microsoft Dynamics AX uses the concept of Accounting currency and Reporting currency These currencies can be viewed in the Ledger form by opening General Ledger, Setup, and clicking Ledger Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-1 Financials II in Microsoft Dynamics® AX 2012 Setup When a company works with multiple currencies, it must be able to track any profits or losses caused by fluctuating exchange rates Currency Revaluation Accounts Under a fixed exchange rate system, the term devaluation and revaluation are defined as official changes in the value of a country's currency relative to other currencies There are many factors that may affect the valuation of a currency including market forces and political policies Procedure: Set Up Currency Revaluation Accounts Set up the accounts to unrealized and realized gains caused by exchange rate fluctuations on the Currency revaluation accounts form Follow these steps to set up accounts to register the exchange rate fluctuations Click General ledger, click Setup, click Currency and then click Currency revaluation accounts Select the Ledger from the drop down list Highlight the Currency in the left hand navigation pane Enter the default main accounts that will be used during the process that include Foreign currency revaluation o Realized loss - The main account in the ledger for posting realized loss in the selected currency This calculates when settlement off a customer and the vendor of the foreign currency documents the realized loss o Realized gain - The main account in the ledger for posting realized gain in the selected currency This calculates when settlement off a customer and the vendor of the foreign currency documents the realized profit 5-2 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency o o Unrealized loss - The main account in the ledger for posting unrealized loss in the selected currency This calculates when an Foreign currency revaluation is processed Unrealized gain - The main account in the ledger for posting unrealized gain in the selected currency This calculates when an Foreign currency revaluation is processed FIGURE 5.1 CURRENCY REVALUATION FORM Currency Rounding Set up rounding criteria when you set up a currency For example, the Turkish currency Lira can be rounded to a full 100 Lira every time, whereas U.S dollars are rounded to the nearest ten cents When you perform rounding: • Sums round off according to a fixed unit • Different rounding options for the Accounts Receivable, Accounts Payable, Sales Order, Purchase Order, and Pricing modules exist • All posting amounts round off to the nearest factor of the specified unit, regardless of whether the system calculates and posts them or the user enters them manually Procedure: Set Up Currency Rounding Follow these steps to set the Rounding options for each currency Click General Ledger, click Setup, click Currency, and then click Currencies Select a currency Move to the Rounding Rules section Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-3 Financials II in Microsoft Dynamics® AX 2012 Round off the sums according to a fixed unit for general transaction amounts For example, amounts on transactions are rounded to the nearest unit to 0.01 Specify the general unit for rounding in the General rounding rule field Round off sums for Accounts Receivable, Accounts Payable, Sales Order, Purchase Order and Pricing These have a Rounding rule as well as a Rounding method Rounding Rule - Enter the unit for rounding amounts, such as 0.10 or 1.00 Rounding Method - Select the rounding convention that applies to the number to the right of the unit that is entered in the Rounding rule text box: • Normal - Round up numbers five and higher and round down numbers four and lower • Downward - Round down all numbers • Rounding-up - Round up all numbers NOTE: The value in the General Rounding rule field affects all values in all modules FIGURE 5.2 EXCHANGE RATES FORM, ROUND-OFF 5-4 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Rounding Considerations All posting amounts are rounded to the nearest factor of the specified unit, regardless of whether they are calculated and posted automatically or entered manually by the user In the General ledger parameters form: • Specify the maximum rounding amount for a voucher in the accounting currency, in the Maximum penny difference field • Set up the rounding for reporting currencies in the Maximum penny-rounding in reporting currency field Foreign Currency Revaluation When a company conducts business in multiple currencies, it is important to adjust balances to account for exchange rate fluctuations Sometimes rate changes can be significant Therefore, balances must reflect the same rate Foreign currency revaluation can be done in Accounts Receivable and Accounts Payable or in the General Ledger CAUTION: Only revalue foreign currency amounts from Accounts Receivable and Accounts Payable or General Ledger If, for example, Foreign currency amounts are adjusted for customers by using the Accounts Receivable module, not at the same time adjust Foreign currency amounts in the General Ledger module Users can perform Foreign currency amounts on the following: • Main accounts in General Ledger • Customer balances in Accounts Receivable • Vendor balances in Accounts Payable NOTE: The process for Accounts Receivable and Accounts Payable is the same except for the menu the process is accessed from and the module that it affects Scenario: Use Foreign Currency Revaluation The Accounting currency for Contoso is the U.S dollar (USD) However, the company frequently interacts with companies in many other currencies For example, Arnie, the Accounts Receivable Administrator, makes a Canadian dollar (CAD) entry on an account The transaction currency amount is converted to its equivalent in USD by using the current exchange rate for CAD, which is defined in the Currency exchange rates form Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-5 Financials II in Microsoft Dynamics® AX 2012 If at a later date the exchange rate changes and the balance on the account must be updated, Arnie runs the foreign currency revaluation to update the balance to reflect the current exchange rate Procedure: Set Up a Main Account for Foreign Currency Revaluation Follow these steps to include a ledger account in exchange adjustments Click General ledger, click Setup, click Chart of accounts, and then click Chart of accounts Click on the Main Account fast tab and click the New button Click the General fast tab and select the Foreign currency revaluation box Immediately when you select it, the transactions posted to that ledger account are available for the foreign currency revaluation process If the Foreign currency revaluation field is selected and if the account is a Balance sheet, Asset, Liability or Equity account, specify how the account must be handled at the time of the revaluation by selecting or clearing the Monetary field o Select this check box if the account is a monetary account Monetary accounts are revalued using the exchange rate of the date that is entered in the To Date field in the Foreign currency revaluation form o If the check box is cleared, the balance in the account is revalued using the exchange rate as of the transaction date NOTE: The Monetary field only applies to exchange rate adjustment in consolidations It does not apply when you are doing exchange rate adjustments for single company transactions Procedure: Run Foreign Currency Revaluation in General Ledger Follow these steps to run exchange rate adjustments in the General Ledger Click General ledger, click Periodic, and then click Foreign currency revaluation to process exchange rate adjustments on the eligible ledger accounts In the From Main account and To Main account fields select the range of accounts that the revaluation process must affect 5-6 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency In the From Date and To Date fields select the dates for the desired foreign currency revaluation Use the To date to find the exchange rate to use for the foreign currency revaluation In the From Currency code and To Currency Code fields specify whether the revaluation is for one currency or for a range of currencies If you are revaluing one currency, enter the same currency in each field Select the Adjust profit and loss accounts field to determine whether you must adjust profit and loss accounts For example, a user might have made the appropriate adjustment for the balance sheet accounts, but must revise the calculation for the profit and loss accounts Select the Adjust balance sheet accounts field to determine whether you must adjust balance sheet accounts For example, clear this field if you not have to adjust the balance sheet accounts in the middle of the month when you run the exchange adjustment If necessary, click the Batch tab to set up batch processing Click OK to run the process FIGURE 5.3 EXCHANGE ADJUSTMENT FORM Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-7 Financials II in Microsoft Dynamics® AX 2012 Accounts Receivable and Accounts Payable Exchange Rate Adjustments The Foreign currency revaluation form in Accounts Receivable and Accounts Payable differs from the Foreign currency revaluation form in General Ledger Use the Accounts Receivable and Accounts Payable Foreign currency revaluation form to: • View all exchange adjustments in the Foreign currency revaluation form • View the exchange revaluation transactions • Print reports to view and analyze the foreign currency revaluation transactions • Show foreign currency revaluation as reviewed • Select the foreign currency revaluation to view in the Show list • Print a Simulation report to view an estimate of the foreign currency revaluation that occurs if an foreign currency revaluation is run Before you run the foreign currency revaluation, make a simulation to determine the effects of the foreign currency revaluation Scenario: Exchange Adjustment Simulation Phyllis, the Accounting Manager at Contoso, wants to know the overall effect of the revaluation before she runs the Foreign currency revaluation and therefore decides to run a simulation The Foreign currency revaluation simulation report will show Phyllis the overall financial effects of running the Foreign currency revaluation on open customer transactions with a particular method, considered date, or date of rate Procedure: Simulate a Foreign Currency Revaluation Follow these steps to run a simulation of an Foreign currency revaluation by a considered date Click Account receivable or Accounts payable, click Periodic, and then click the Foreign currency revaluation Click the Simulation button In the Method list, select the exchange adjustment method from the following: o Standard - revalue based on the exchange rate used on the date specified in the Date of rate field o Minimum - revalue if a loss occurs, but not if a profit exists o Invoice date - the program offsets any revaluation that is not already offset This causes the documents being valued at its original value 5-8 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Select the Considered date on which Microsoft Dynamics AX finds all documents that are open on that date and makes a revaluation if it is necessary Documents that are open on this date, but are settled before the revaluation date, adjust in the periodic job In the Date of rate field, enter the date of rate The date of rate determines the revaluation used in the Foreign currency revaluation Click the Select button to limit and sort the data to include in the report Click the Destinations button to determine how to print or save the report Click OK to view the report The simulation report lists the open balances in the accounting and the reporting currency The report lists exchange rates used in the simulation Scenario: Run a Foreign Currency Revaluation in Accounts Payable Consider the following scenario: • April, the Accounts Payable Administrator at Contoso, is behind with the invoicing • The period's closing date is January 31 • April settles an invoice February • When all entries for the period are complete, Phyllis, the Accounting Manager, starts the Foreign currency revaluation process • Phyllis runs the foreign currency revaluation on February 5, but with a considered date of January 31 • The invoice settled February also must be revalued as of January 31 • The Foreign currency revaluation includes all documents with open amounts on the considered date This includes documents that are currently settled, but were open on the considered date Procedure: Run Foreign Currency Revaluation from Accounts Receivable Follow these steps to run the foreign currency revaluation from the Accounts Receivable module to adjust rate on specified customer documents NOTE: Unlike General Ledger revaluation, there is no setup required for individual customers Click Accounts receivable, click Periodic, and then click Foreign currency revaluation From the Foreign currency revaluation form, click the Foreign currency revaluation button Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-9 Financials II in Microsoft Dynamics® AX 2012 In the Method list, select the Foreign currency revaluation method from the following: o Standard - Revalue based on the exchange rate used on the date specified in the Date of rate field o Invoice date - Revalue based on the exchange rate used on the invoice date o Minimum - Revaluation is made if there is a loss, but not if there is a profit Enter the Considered date on which Microsoft Dynamics AX finds all documents that are open on that date and makes a revaluation if it is necessary In the Date of rate field, enter the date of rate Depending on the revaluation method selected, the documents are adjusted in relation to the exchange rate for the date entered In the Posting Profile fields select which posting profile to use for the exchange adjustment: o Posting - The posting profile of the customer transaction is used o Select - The posting profile is determined by the posting profile in the Posting profile field If Select is selected in the Use posting profile from field, the posting profile of the revaluation adjustments is determined by the posting profile in this field Select among the posting profiles that have been set up for the legal entity in the Customer posting profile form In the Dimension list, select which dimension to use for the foreign currency revaluation: o None - Financial dimensions are not used o Table - The financial dimensions are retrieved from the customer table o Posting - The financial dimensions are taken from the customer transaction Click the Print field to print a report of the Foreign currency revaluation Click the OK button to run the Foreign currency revaluation NOTE: The fields on the right side of the window are optional Click the Select button to open a query window to limit criteria to specific customers, currency codes, and so on If there are no selections in these fields, the revaluation runs over all customers and currency codes and may take additional time NOTE: The Text Notes and Description fields are optional These fields may be used to add notes and comments to the foreign currency revaluation adjustments 5-10 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Procedure: View Foreign Currency Revaluation Documents When the foreign currency revaluation process is complete, follow these steps to review the documents Click Accounts receivable, click Periodic, and then click Foreign currency revaluation, or click Accounts payable, click Periodic, and then click Foreign currency revaluation Select the revaluation adjustment of interest Click the Voucher button to view the journal entries that were created by the selected foreign currency revaluation There can be several ledger voucher lines for each customer or vendor document that is created by the foreign currency revaluation Click the Transactions button to view the customer or vendor transactions that were created by the selected revaluation NOTE: Click the Transaction Origin, Audit Trail, Posted Sales Tax, or Original Document button to inquire about further detail on the transactions origin Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-11 Financials II in Microsoft Dynamics® AX 2012 Lab 5.1 - Accounts Receivable Foreign Currency Revaluation Scenario Arnie, the Accounts Receivable Administrator at Contoso, is asked by Ken, the Controller, to confirm whether the Foreign currency revaluation process was run for customer 2104 - Cheetah Concert Hall for 11/01/2012 If it has not been run, Ken asks Arnie to run the process by using the following information Field Value Method Standard Considered date 11/01/2010 Date of rate 11/01/2010 Use posting profile from Posting Posting profile Gen Dimension None Challenge Yourself! With the information that was provided, help Arnie run the Foreign currency revaluation Need a Little Help? • Review the currency code, balances, and transaction details for customer 2104 • Determine whether the exchange rate was entered for the currency assigned to 2104 • Run the Foreign currency revaluation Step by Step Review the customer information: Click Accounts receivable, click Common, click Customers, and then click All customers Locate customer 2104 and double-click on this line Click the Balance button on the action pane and note the different amounts in the Balance Currency and Balance fields Click the Open Transactions button and note the values in the Date and Amount in transaction Currency and Currency fields Close the forms 5-12 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Verify each currency has an exchange rate set up: Click General ledger, click Setup, click Currency, and then click Currency exchange rates Select Default as the Exchange rate type and then highlight the line for CNY In the Exchange rate pane, verify that the From and To date is before and after 11/1/2010 Change the date if necessary Close the form Run the exchange rate adjustment: Click Accounts receivable, click Periodic, and then click Foreign currency revaluation From the Foreign currency revaluation form, click the Foreign currency revaluation button In the Considered date field, click the calendar icon to select 11/1/2010 In the Date of rate field, enter 11/1/2010 Click the Select button Click in the Criteria field in the line with the field Customer Account, and enter 2104 Click OK Click OK Close the Foreign currency revaluation form Review the customer information for any updates: Click Accounts receivable, click Common, click Customers, and then click All customers Locate customer 2104 and double-click on this line Click the Balance button on the action pane and note the different amounts in the Balance Currency and Balance fields Click the Open Transactions button and note the values in the Date and Amount in transaction Currency and Currency fields Close the forms Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-13 Financials II in Microsoft Dynamics® AX 2012 Summary Transactions in Microsoft Dynamics AX can be recorded in various currencies, even on the same debtor/creditor or ledger account Many calculation methods are available to meet the accounting requirements in different countries Posted unrealized revaluation adjustments are automatically reversed when a new foreign currency revaluation adjustment job is processed or when a realized revaluation difference is posted - for example at settlement 5-14 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Test Your Knowledge Test your knowledge with the following questions Select which of the following Posting accounts can be set up in Microsoft Dynamics AX for Foreign currency revaluation (Select all that apply) ( ) Realized gain ( ) Unrealized gain ( ) Realized Loss ( ) Unrealized Loss In what modules does Microsoft Dynamics AX provide functionality to run foreign currency revaluation? (Select all that apply) ( ) General Ledger ( ) Accounts Payable ( ) Accounts Receivable ( ) Fixed Assets What three options are available to determine where dimensions will be retrieved for posting? (Select all that apply) ( ) Table ( ) None ( ) All ( ) Posting Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-15 Financials II in Microsoft Dynamics® AX 2012 Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter 5-16 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement Chapter 5: Multicurrency Solutions Test Your Knowledge Select which of the following Posting accounts can be set up in Microsoft Dynamics AX for Foreign currency revaluation (Select all that apply) (√) Realized gain (√) Unrealized gain (√) Realized Loss (√) Unrealized Loss In what modules does Microsoft Dynamics AX provide functionality to run foreign currency revaluation? (Select all that apply) (√) General Ledger (√) Accounts Payable (√) Accounts Receivable ( ) Fixed Assets What three options are available to determine where dimensions will be retrieved for posting? (Select all that apply) (√) Table (√) None ( ) All (√) Posting Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement 5-17 Financials II in Microsoft Dynamics® AX 2012 5-18 Microsoft Official Training Materials for Microsoft Dynamics® Your use of this content is subject to your current services agreement