Multicurrency Reporting in Microsoft Dynamics AX 2012

Reporting in multicurrency in Microsoft Dynamics AX 2012 is achieved through the use of currency translation within the consolidations function.  For example, a subsidiary operating in functional and reporting currency of EUR for local statutory requirements, but required to report in USD for its parent company in the US.

First a consolidation legal entity must be created with functional and reporting currency of USD:

a)      Navigate to Organization administration>Setup>Legal Entity: check “Use for financial consolidation process”

b)      Navigate to General Ledger>Setup>Ledger to configure the Ledger for the consolidation company;

  •  Assign the same COA and calendar as that of the subsidiary, assign USD for functional and reporting currencies.

c)      Navigate to General Ledger>Setup>Posting>Accounts for automatic transactions

  •  Define the main account for the transaction types “Profit and loss account for consolidations differences and “Balance account for consolidation differences.” These are the accounts where the exchange rate adjustment will be posted.

Exchange rate types for average, period end, and historical rates must be defined between USD and EUR:

d)      Navigate to General Ledger >Setup>Currency>Exchange rate types

  • Create rate types of average, period end and historical. Enter the related exchange rates for each type by selecting the “Exchange rate” button. These exchange rate types are assigned to a range of main accounts in consolidation for balance sheet, income statement and equity in order to achieve currency conversion results in accordance with GAAP.

With the consolidation company created, the consolidation and currency translation process must be configured.

e)      Navigate to General Ledger>Periodic>Consolidate>Consolidate [Online]

    1. Criteria Tab> select  the account range for all main accounts to be translated and consolidated, the period , check      include actuals and include budgets if budgets exist.Multicurrency Reporting
    2. Financials Dimension Tab> select the financial dimensions to be consolidated
    3. Legal Entities Tab> Select the subsidiary EUR and which account, Balance or P&L, for the exchange rate adjustment. This correlates to the setup from step c) aboveconsolidate-balance
    4. Description tab> this description will be the default text  for the voucher created in the consolidation
    5. Elimination tab is utilized for the processing of eliminating transactions which is not a requirement for currency translation in consolidation and can be left blank
    6. Currency translation tab> define which currency exchange rates will be utilizes with various main accounts.
          1. Enter the subsidiary name (source legal entity name), the functional currency (source accounting currency) the main account range (from account /to account) and the associated exchange rate type to be applied to the local currency during the consolidation process (Exchange rate type).
          2. For each account range in 1 above, select the Exchange rate date which indicates if the exchange rate should be based on the transaction date or the date of the consolidation.
          3. A specific rate can also be used by entering the specific exchange rate in the Exchange rate field. This will override all other rate selections.

Consolidate EUR

Run consolidation by selecting “Ok”.

To view the consolidation results navigate to General Ledger>Inquiries>Consolidations. Select “Transactions” to view the voucher entries created by the consolidation. Results can also be reviewed through the numerous general ledger standard reports such as the trial balance and ledger transaction list.

5 thoughts on “

Multicurrency Reporting in Microsoft Dynamics AX 2012

  1. I am dealing with a company with numerous subsidiaries and a couple of consolidation companies that ultimately rollup to a global consolidation. When doing the foreign currency revaluation in GL for the subsidiaries each month, I have the Balance Sheet accts checked for “Foreign Currency Revaluation” and those that have a foreign currency are checked as “Monetary” as well. They want to revalue the balance sheet accounts monthly to an equity account called “Cumulative Transaction Adjustment”. I am used to revaluing them to the Unrealized Gains/Losses in the P&L.
    I am thinking that, perhaps, this revaluation they are talking about should happen at the Consolidation Company level and push the difference to the Equity account and keep the subs using the P&L accts setup for their reval each month. Am I off base on this assessment?

    1. Gary,
      Your assessment is accurate. Typically there are two separate processes when dealing with foreign currencies. The first, as you noted is “Revaluation”, which recognizes any “Unrealized Gains and Losses” on open foreign currency transactions to a P/L account. This typically impacts customer and vendor invoices that have not yet been settled and are considered “Open foreign currency” transactions. The realized gain or loss is automatically posted by AX during the settlement of these invoices.

      The second process of “Translation”, applies to Companies that consolidate the results of foreign operations denominated in local currencies into U.S. Dollars (USD) for financial statement reporting. Financial Accounting Statement No. 52, Foreign Currency Translation (FAS 52), sets forth the appropriate accounting treatment under U.S. GAAP. In AX the “Translation” process is executed as part of the “Consolidations” function. It is the configuration of the “Consolidation” function which allows users to select the “Cumulative Transaction( Translation ) Adjustment account. This can be either a balance sheet or P/L account depending on the statutory requirements. The configuration also enables the use of specific rates for Translation for historical balances such as “ Investment in subsidiary” or Fixed Assets.

      Please contact Tridea if you require any assistance in configuring the consolidations form in AX.

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