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Foreign currency translation

  • 1.  Foreign currency translation

    Posted 29 days ago
    Hello,

    We are in the process of implementing MSD 365. Our reporting currency is Cad$. We encounter an issue in foreign currency translation. Please see the following example:

    • Acquired asset or received service on June 15, 2019, for USD 1,000.00
    • Invoice date June 17, 2019
    • Received and processed the invoice on August 10, 2019

    Based on the above example, the Procurement and Sourcing module in MSD 365 will create an accrual (Dr. Asset/Expense Cr. Accrual) and revalue the asset/expense using the spot rate on June 15, 2019. When the invoice was received and entered into MSD 365 on August 10, 2019, the accrual was reversed and a permanent entry was booked (Dr. Asset/Expense Cr. Trade Payable). The foreign currency issue arises because out of the box functionality in MSD 365 revalue the asset/expense using the date when the invoice is received, i.e.: exchange rate on August 10, 2019. Our view is that this is not aligned with IFRS. We should revalue the asset/expense using the transaction date, i.e.: June 15, 2019 (the date we acquired the asset/received the service) or June 17, 2019 (invoice date).

    Does anyone have a similar experience? appreciate if you could share how to address this issue.

    Thank you,



    ------------------------------
    Antonius Haryanto
    goeasy Ltd
    Mississauga
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    Conference-AXUG_200x200


  • 2.  RE: Foreign currency translation

    SILVER CONTRIBUTOR
    Posted 29 days ago
    Hi Antonius

    Are you using the Acquire Asset from Invoicing option? If you want to activate the asset as of receiving and not invoicing you can acquire the asset on June 15 using an asset journal and book it to a clearing account which you then reverse when the invoice comes in and have no impact on the asset at time of invoicing.

    Thanks,


    ------------------------------
    Arush Kuthiala
    Western Computer
    Toronto ON
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    Conference-AXUG_200x200


  • 3.  RE: Foreign currency translation

    Posted 28 days ago
    Thank you, Arush. I think this is an option if we can change the configuration in MSD 365.

    ------------------------------
    Antonius Haryanto
    goeasy Ltd
    Mississauga
    ------------------------------

    Conference-AXUG_200x200


  • 4.  RE: Foreign currency translation

    TOP CONTRIBUTOR
    Posted 29 days ago
    My understanding is that the "doc date" on a transaction drives the exchange rate not the "posting date".

    ------------------------------
    Kaare Boraas
    Relationship Manager
    PCL Constructors Inc.
    Edmonton AB
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    Conference-AXUG_200x200


  • 5.  RE: Foreign currency translation

    Posted 28 days ago
    That is also my understanding/assumption, but it is not the case apparently.

    ------------------------------
    Antonius Haryanto
    goeasy Ltd
    Mississauga
    ------------------------------

    Conference-AXUG_200x200


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