Ax2009 Enus Finii 03

Chapter 3: Multicurrency

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CHAPTER 3: MULTICURRENCY Objectives

The objectives are

• Complete the setup steps that are required for exchange rate adjustments

• Run exchange rate adjustments in General Ledger • Run exchange rate adjustments in Accounts Receivable and

Accounts Payable

Introduction Microsoft Dynamics AX 2009 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 exchange rate adjustments.

Exchange rates constantly fluctuate. Therefore, exchange rate adjustments are necessary for correct periodic accounting. If you do 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 misleading.

HINT: The default company currency and secondary currency are designated on the Other tab in the Company information form. To access the Company information form, click Basic, click Setup, and then click Company information.

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Financials II in Microsoft Dynamics® AX 2009

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Setup When a company works with multiple currencies, it must be able to track any profits or losses caused by fluctuating exchange rates.

Procedure: Set Up Exchange Rate Profit and Loss Accounts

Set up the accounts to track profits or losses caused by exchange rate fluctuations on the Exchange rates form. Follow these steps to set up profit and loss accounts to register the exchange rate fluctuations.

FIGURE 3.1 EXCHANGE RATES FORM, POSTING TAB

1. Click General ledger, click Setup, and then click Exchange rates. 2. Highlight a currency, and then click the Posting tab.



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3. Specify the following ledger accounts to track currency profits and losses: • Realized loss - The account number in the ledger for posting

realized loss in the current currency. This calculates when settlement occurs.

• Realized profit - The account number in the ledger for posting realized profit in the current currency. This calculates when settlement occurs.

• Unrealized loss - The account number in the ledger for posting unrealized loss in the current currency. This calculates when an Exchange Adjustment is processed.

• Unrealized profit - The account number in the ledger for posting unrealized profit in the current currency. This calculates when an Exchange adjustment is processed.

When you set up the exchange rate accounts, Microsoft Dynamics AX 2009 is ready to run the exchange rate adjustments.

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 and

Accounts Payable modules and for prices 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 up currency rounding.

1. Click General ledger, click Setup, and then click Exchange rates. 2. In the Exchange rates form, click the currency, and then click the

Round-off tab. 3. Enter round-off values in the following fields:

• General round-off - Specify the general unit for rounding. • Round off order - Enter the unit for rounding off amounts on

sales orders. • Round off purchase - Enter the unit for rounding off amounts

on purchase orders. • Rounding price - Enter the unit for rounding off prices.



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4. After you set up the round-off values, define how that rounding operates related to the round-off field. In the Rounding from fields select from one of the following:

• Normal - Round up numbers five and greater and round down numbers four and less.

• Downward - Round down all numbers. • Rounding-up - Round up all numbers.

CAUTION: The value entered in the General round-off field affects all values in all modules. Therefore, enter the value 0.01, as this is the smallest unit for all amounts within the whole system that includes, for example, the posted tax amounts.

FIGURE 3.2 EXCHANGE RATES FORM, ROUND-OFF TAB



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Test Your Knowledge

1. Select which of the following Posting accounts can be set up in Microsoft Dynamics AX 2009 for exchange rate adjustments. (Select all that apply)

( ) Realized Profit ( ) Unrealized Profit ( ) Realized Loss ( ) Unrealized Loss

Exchange Rate Adjustments 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.

When you make exchange rate adjustments, make the adjustments in Accounts Receivable and Accounts Payable or in the General Ledger.

CAUTION: Only adjust exchange rates from Accounts Receivable and Accounts Payable or General Ledger. If, for example, exchange rates are adjusted for customers by using the Accounts Receivable module, do not at the same time adjust exchange rates in the General Ledger module.

Users can perform exchange rate adjustments on:

• Ledger accounts in General Ledger • Customers in Accounts Receivable • Vendors 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 Exchange Rate Adjustments

The default company currency for Contoso is USD. However, the company very 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 balance converts to its equivalent in U.S. dollars by using the current exchange rate for CAD, which is defined in the Exchange rates form.

If at a later date the exchange rate changes and the balance on the account must be updated, Arnie runs an unrealized exchange adjustment to update the balance to reflect the current exchange rate.



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Procedure: Set Up a Ledger Account for Exchange Adjustments

Follow these steps to include a ledger account in exchange adjustments.

1. Click General ledger, and then click Chart of Account Details. 2. Select an account, and then click the General tab. 3. Select the Exchange adjustment field. Immediately when you select

it, the transactions posted to that ledger account are included in exchange rate adjustments.

4. If the Exchange adjustment field is selected and if the account is a Balance, Fixed Asset, or Liability account, specify how the account must be handled at the time of the adjustment by selecting or clearing the Monetary field.

• When the Monetary field is selected, during revaluation the system revalues the account by using the exchange rate of the date that is entered in the To Date field in the Exchange adjustment form. For example, do this in a liquidity account, because you should know how much liquidity the company has at the time of the exchange adjustment.

• If the Monetary field is cleared, during revaluation the system revalues the account by using the exchange rate of the transaction date.

NOTE: After you set up a currency to be included in the exchange adjustments, you can view the current balance in foreign currencies from the Chart of accounts form by clicking the Balance button, and then clicking Balance by currency.

FIGURE 3.3 CHART OF ACCOUNTS FORM, GENERAL TAB



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Procedure: Run Exchange Rate Adjustments in General Ledger

Follow these steps to run exchange rate adjustments in the General Ledger.

1. Click General ledger, click Periodic, and then click Exchange adjustment to process exchange rate adjustments on the eligible ledger accounts.

2. In the From Account and To Account fields select the range of accounts that the adjustment must affect.

3. In the From Date and To Date fields select the dates for the desired exchange rate adjustment. Use the To date to find the exchange rate to use for the exchange rate adjustments.

4. In the From Currency code and To Currency Code fields specify whether the adjustment is for one currency or for a range of currencies. If you are running one currency, enter the same currency in each field.

5. Select the Adjust profit & 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.

6. Select the Adjust balance sheet accounts field to determine whether you must adjust balance sheet accounts. For example, clear this field if you do not have to adjust the balance sheet accounts in the middle of the month when you run the exchange adjustment.

7. If necessary, click the Batch tab to set up batch processing. 8. Click OK to run the process.

NOTE: If a secondary currency is set up, make exchange adjustments separately for the default and secondary currency by selecting the different currencies in the From Currency Code and To Currency Code fields.

FIGURE 3.4 LEDGER - EXCHANGE ADJUSTMENT FORM



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Accounts Receivable and Accounts Payable Exchange Rate Adjustments

The Exchange adjustment form in Accounts Receivable and Accounts Payable differs from the Exchange adjustment form in General Ledger. Use the Accounts Receivable and Accounts Payable Exchange adjustment form to:

• View all exchange adjustments in the Exchange adjustment form. • List one transaction for each exchange adjustment with an audit trail

linked to view Voucher transactions. • View the exchange adjustment transactions. • Print reports to view and analyze the exchange rate adjustment

transactions. • Mark exchange rate adjustments as reviewed. • Select the exchange rate adjustments to view in the Show list. • Print a Simulation report to view an estimate of the exchange

adjustment that occurs if an exchange adjustment is run.

Before you run the exchange adjustment, make a simulation to determine the effects of the exchange adjustments.

Scenario: Exchange Adjustment Simulation

Phyllis, the Accounting Manager at Contoso, wants to know the overall effect of the exchange adjustment before she runs the exchange adjustment and therefore decides to run a simulation. The exchange adjustment simulation report will show Phyllis the overall financial effects of running the exchange adjustment on open customer transactions with a particular method, considered date, or date of rate.

Procedure: Simulate an Exchange Adjustment

Follow these steps to run a simulation of an exchange rate adjustment by a considered date.

1. Click Account receivable or Accounts payable, click Periodic, and then click Exchange adjustment.

2. Click the Simulation button.



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3. In the Method list, select the exchange adjustment method from the following: • Standard - Make adjustments based on the exchange rate used

on the date specified in the Date of rate field. • Minimum - Make an adjustment if a loss occurs, but not if a

profit exists. • Invoice date - The program offsets any exchange adjustment

that is not already offset. This causes the transaction being valued at its original value.

4. Select the Considered date on which Microsoft Dynamics AX 2009 finds all transactions that are open on that date and makes an exchange adjustment if it is necessary. Transactions that are open on this date, but are settled before the exchange adjustment date, adjust in the periodic job.

5. In the Date of rate field, enter the date of rate. The date of rate determines the exchange rate used in the exchange adjustment.

6. Click the Select button to limit and sort the data to include in the report.

7. Click the Options button to determine how to print or save the report.

8. Click OK to view the report. The simulation report lists the open balances in the originating currency and the company currency. The report lists exchange rates used in the simulation.

FIGURE 3.5 CUSTOMER - EXCHANGE ADJUSTMENT SIMULATION FORM



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Scenario: Run an Exchange Rate Adjustment

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 3. • When all entries for the period are complete, Phyllis, the Accounting

Manager, starts the unrealized exchange adjustment. • Phyllis runs an exchange adjustment on February 5, but with a

considered date of January 31. • The invoice settled February 3 also must be exchange adjusted by

January 31. • The exchange adjustment includes all transactions with open

amounts on the considered date. This includes transactions that are currently settled, but were open on the considered date.

Procedure: Run Exchange Rate Adjustments from Accounts Receivable

Follow these steps to run an exchange rate adjustment from the Accounts Receivable module to adjust rate on specified customer transactions.

NOTE: Unlike General Ledger adjustments, there is no setup required for individual customers.

1. Click Accounts receivable, click Periodic, and then click Exchange adjustment.

2. From the Exchange adjustment form, click the Exchange adjustment button.

3. In the Method list, select the exchange adjustment method from the following: • Standard - Make adjustments based on the exchange rate used

on the date specified in the Date of rate field. • Invoice date - Make adjustments based on the exchange rate

used on the invoice date. • Minimum - An adjustment is made if there is a loss, but not if

there is a profit.

4. Enter the Considered date on which Microsoft Dynamics AX 2009 finds all transactions that are open on that date and makes an exchange adjustment if it is necessary.



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5. In the Date of rate field, enter the date of rate. Depending on the exchange adjustment method selected, the transactions are adjusted in relation to the exchange rate for the date entered.

6. In the Dimension list, select which dimension to use for the exchange rate adjustment: • None - Dimensions are not used. • Table - The dimensions are retrieved from the customer table. • Posting - The dimensions are taken from the customer

transaction.

7. Click the Print field to print a report of the exchange rate adjustment.

8. Click the OK button to run the exchange adjustment.

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 adjustment runs over all customers and currency codes and may take additional time.

Procedure: View Exchange Adjustment Transactions

When the exchange adjustment process is complete, follow these steps to review the transactions.

1. Click Accounts receivable, click Periodic, and then click Exchange adjustment, or click Accounts payable, click Periodic, and then click Exchange adjustment.

2. Select the exchange adjustment of interest. 3. Click the Voucher button to view the ledger transactions created by

the selected exchange adjustment. There can be several ledger voucher lines for each customer or vendor transaction that is created by the exchange adjustment.

4. Click the Transactions button to view the customer or vendor transactions created by the selected exchange adjustment.



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Lab 3.1 - Accounts Receivable Exchange Rate Adjustment Scenario

Arnie, the Accounts Receivable Administrator at Contoso, is asked by Ken, the Controller, to confirm whether the exchange rate adjustment process was run for customer 2104 - Cheetah Concert Hall for 11/01/2008. If it has not been run, Ken asks Arnie to run the process by using the following information.

Field Value

Method Standard

Considered date 11/01/2008

Date of rate 11/01/2008

Use posting profile from Posting

Posting profile Gen

Dimension None

Challenge Yourself!

With the information that was provided, help Arnie run the exchange adjustment.

Need a Little Help? 1. Review the currency code, balances, and transaction details for

customer 2104. 2. Determine whether the exchange rate was entered for the currency

assigned to 2104. 3. Run the exchange rate adjustment.

Step by Step

First, review the customer information.

1. Click Accounts receivable, and then click Customer Details. 2. Locate customer 2104. 3. Click the General tab and note the contents of the Currency field. 4. Click the Balance button and note the different amounts in the

Balance Currency and Balance fields. 5. Click the Open Transactions button and note the values in the Date

and Amount Currency fields. 6. Close the forms.



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Next, verify each currency has an exchange rate set up.

1. Click General ledger, click Setup, and then click Exchange rates. 2. In the Overview pane, click the line for CNY. 3. In the Exchange rate pane, verify a line is entered for 11/1/2008. 4. Close the form.

Run the exchange rate adjustment.

1. Click Accounts receivable, click Periodic, and then click Exchange adjustment.

2. From the Exchange adjustment form, click the Exchange adjustment button.

3. In the Considered date field, click the calendar icon to select 11/1/2008.

4. In the Date of rate field, enter 11/1/2008. 5. Click the Select button. 6. Click in the Criteria field in the line with the field Customer

Account, enter 2104. 7. Click OK. 8. Click OK. 9. Close the Exchange Rate Adjustment form.

Review the customer information for any updates.

1. Click Accounts receivable, and then click Customer Details. 2. Locate customer 2104. 3. Click the Balance button and note the different amounts in the

Balance Currency and Balance fields. 4. Close the forms.



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Summary Transactions in Microsoft Dynamics AX 2009 can be recorded in various currencies, even on the same debtor/creditor or ledger account. This is necessary for correct periodic accounting; several calculation methods are available to meet the accounting requirements in different countries.

Posted unrealized exchange rate adjustments are automatically reversed when a new exchange rate adjustment job is run or when a realized exchange rate difference is posted - for example at settlement.



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Test Your Knowledge Test your knowledge with the following questions.

1. In what modules does Microsoft Dynamics AX 2009 provide functionality to run exchange rate adjustments? (Select all that apply)

( ) General Ledger ( ) Accounts Payable ( ) Accounts Receivable ( ) Fixed Assets

2. What three options are available to determine where dimensions will be retrieved for posting? (Select all that apply)

( ) Table ( ) None ( ) All ( ) Posting



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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter

1.

2.

3.



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Solutions Setup

1. Select which of the following Posting accounts can be set up in Microsoft Dynamics AX 2009 for exchange rate adjustments. (Select all that apply)

(√) Realized Profit (√) Unrealized Profit (√) Realized Loss (√) Unrealized Loss

Test Your Knowledge

1. In what modules does Microsoft Dynamics AX 2009 provide functionality to run exchange rate adjustments? (Select all that apply)

(√) General Ledger (√) Accounts Payable (√) Accounts Receivable ( ) Fixed Assets

2. What three options are available to determine where dimensions will be retrieved for posting? (Select all that apply)

(√) Table (√) None ( ) All (√) Posting



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