Currency translation methods for consolidating financial statements
Business Case 1: Let us assume that CRONUS International Inc.specializes in bicycle production and operates in USA.As a result of this requirement, accountants need to perform consolidation adjustments to the consolidated balance sheet. Next, let us take a quick glance at one of the Income Statement GL accounts in order to check how transactions for this GL account will be transferred after the consolidation is run later.The consolidation functionality in Microsoft Dynamics NAV provides the possibility to specify a currency translation method that will be used during the consolidation process on each GL card and calculate currency exchange rate gains and losses resulting from consolidating different parts of financial statements at different exchange rates. uses GL accounts numbers that differ from the GL account numbers in the chart of accounts of the CRONUS International Ltd. For this type of accounts and generally all Income Statement GL accounts, we will need to choose the Historical Rate consolidation translation method.Let us now run the Import Consolidation from DB batch job.We assume that in the course of consolidation the consolidation company wants only information, related to the Department dimension to be transferred. owns only 45% of CHAIN Co., we intended only 45% of transaction amounts to be consolidated to the general ledger of Cronus International Inc.The quantity of entries transferred is less in terms of lines, since in the process of transferring the entries, the entries were grouped by dimension set ID.Notice that the dimension values were changed according to the mapping we performed earlier.
and CHAIN Co., continued to exist as separate entities and to prepare separate financial reports. needs to reflect the financial state of its investment into 45% shares of its affiliate on its balance sheet. that operates in USA, but wants to enter the market of Belgium. establishes a subsidiary company CRONUS Belgium Ltd. Each of the three companies – the parent company and its two business units – perform an independent activity, but at the end of the year the financial results are consolidated into CRONUS International Inc.In order to evaluate the success of the company in whole or for tax reporting purposes, the parent companies collect the summary of the business activity results throughout all divisions and child companies.The summary of financial information is referred to as the consolidated financial statements.In our example, both companies are located within the same database.In order to consolidate the companies, we create a list of business units that will be included into the consolidation process.