FICO Configuration Series – Part 8
Define Parallel Currencies
Financial Accounting >> Financial Accounting Global Settings >> Company Code>> Parallel Currencies >> Define additional local currencies
Transaction Code: OB22
Company Code: Enter the four-digit identifier of the company code that you wish to configure.
1st Local Currency: These fields will fill in automatically with default information based on the currency defined in the company code definition.
2nd and 3rd Local Currency: As explained earlier, each company code can have two additional parallel currencies that can be used in conjunction with local currency defined for the company code
Curr. type: The currency type field specifies which type of parallel currency you want to configure. The following options are available.
Group Currency: Group currencies are defined at the client level in table T000. Group currencies are used to enable cross-company postings in controlling for company codes that use different company code currencies.
Hard Currency: Hard currencies are used for subsidiaries in countries with a lot of inflation. Hard currencies allow you to better valuate transactions in an inflationary economic environment.
Index-Based Currency: Index-based currencies are used for statutory reporting purposes for subsidiaries in some countries that have extreme amount of inflation.
Ex. Rt. Type: The exchange rate type determines how foreign currencies are revalued at the time of foreign currency revaluation and translation. The number of possible entries is too numerous to list here J
Srce Curr: Enter the source currency that the foreign currency is to be translated against. The possible entries are as follows:
Translation taking transaction currency as basis: This option always tries to translate the parallel current against the transaction currency of the document.
Translation Taking First Local Currency as Basis: This option always translates the parallel currency against the first local currency (company code currency).
TrsDte Typ: This setting is used to determine which date is used for foreign currency translations. The available options are as follows:
1. Document Date: Select this option if you want the translation calculation to use the exchange rate that was In effect on the day the document was dated.
2. Posting Date: Select this option if you want the translation calculation to use the exchange rate that was in effect on the posting date in the document.
3. Translation Date: Select this option if you want the translation calculation to use the exchange rate that is in effect on the date of the foreign currency translation.
Saks Apparel has decided to use a hard currency to help offset the inflationary pressures of its Mexican based company code. US dollars are used as hard currency. The peso is the company code currency for the Mexican division. Saks Apparel has decided to use the transaction currency as the base currency for translation and to use translation date to determine proper exchange rate. Because we have company codes with different currencies using the same controlling area, we also configured a group currency of US dollars for all company codes. The group currency will allow us to make cross company code postings in the controlling module. We will also need to make entries for all of the US company codes to add the group currencies to their records.