Exchange Variation - CTBA381 -- 30419

Exchange Variation - CTBA381

Exchange is the relation of values between currencies for acquisition of assets. It is the exchange of goods.

Exchange variation is the parity between the values in two currencies.

When a company imports a product, it pays the Brazilian Central Bank in Real, which in turn pays the foreign supplier in dollars, according to the day's rate.

The inverse is done in case of exports. In this case, the buyer abroad sends Dollars to the Brazilian Central Bank, which receives them and pays the Brazilian exporter in Real, according to the day's rate.

The exchange variation routine is available for all countries, except Brazil. This routine has suffered some changes, such as:

a)       We have eliminated the option Currency Criterion

b)        We have created a new question group: CT381A

                  a.       We have changed the question Which Currency to Base Currency.

                  b.       We have created the question Entered Conversion Rate.

The exchange variation routine corrects the ledger accounts balance with entries in hard currency (01). The system uses as base the account balances and the index, calculates and adjusts the account balances, also generating an adjustment entry in Accounting Entries Table (CT2) and the respective adjustment in the Balances Table (CT7).

Example of exchange variation calculation:

In the accounting entry, the system posts against the correction account (Monetary Variation Account - CT1_CTAVM). In this case (BRL 300.00), the system automatically adjusts the account balance in legal tender to BRL 3,000.00.

To perform the monetary variation, follow these procedures:

• In the Chart of Accounts Register, you are required to enter the monetary variation account. Accounts not associated to the "variation account" in the register are disregarded.

• If the account's conversion criterion is Entered, you must fill in the conversion rate in the Entered Conversion Rate question and, in the Chart of Accounts or Currency Registers, you must set the criterion for the currency to 4=Entered.

       ?   Be mindful that some countries have not yet legislated the monetary variation adjustment process. However, the procedure is legal in Uruguay.

To perform the exchange variation:

In the miscellaneous window \Currency Adjustment\ Monetary Variation, the system displays the parameter screen for you to set them. If this screen is not displayed, Click Parameters.

The system displays a screen with specific parameters of the routine.

Follow field help instructions to fill them in, observing the following data:

1. Reference Date
Enter the calculation date for the exchange variation calculation. The system uses the account balances up to the entered date.

2.     Batch Number
Enter the batch number from which to save the records that this routine generates.

3.     Sub-batch Number
Enter the sub-batch number to be recorded in the accounting entry.

4.     Document Number
Enter the document number from which to generate the accounting entries.

5.     Default History Code
Enter the code of default history to be used for generating accounting entries.

6.     From Account
Enter the initial account from which exchange variation will be calculated. If you want to use all accounts, leave this parameter blank.

7.     To Account
Enter the final account to which exchange variation will be calculated. If you want to use all accounts, fill in this parameter with "ZZZZZZZZZ".

8.     Base Currency
Enter the currency to be used for calculating exchange variation. In this parameter, enter a currency other than currency 01, because entries will be received in this currency. For Bolivia, the parameter is available to enter 01, because their laws allow such variation.

9.     Balance Type
Select the balance type to be used for calculating exchange variation.

10.  Split Entry
Enter whether the entries must be of:

Double Entry — split = no
Debit/Credit — split = yes

Note: In this parameter, you must enter Split = NO, because the option Split = YES was developed for a specific customer.

11.  Use Criterion
Enter whether the criterion used will be:
Default criterion adopted for the currency (entered in the Currency Register);
Criterion set in ledger account.

The conversion criterion field will be used in accordance with the account's regular status. If the conversion criterion is Entered, you must fill in the conversion rate in the question Entered Conversion Rate.

12.  Entered Conversion Rate
Enter the rate value to be used when converting values. This question is only used for the entered conversion criterion.

13.  Use Cost Center
Enter this only if you will execute variation in this entity

14.  Use Item
Enter this only if you will execute variation in this entity

15.  Use Class
Enter this only if you will execute variation in this entity

16.  Variation Method
Enter whether the monetary variation method to be used is 'Base Currency' or 'Hard Currency'. For the time being, this parameter is only released for Bolivia, so you cannot use it for other locations. In this case, use 'base currency'.

Confirm the parameter settings. The system returns to the routine's description screen.

Confirm it again.

After finishing, the user can check it in the transaction.

Thus, we must emphasize that the system will generate variations directly in hard currency; however, the chart of accounts, the rates, and the currencies must be fully correct (CT1_CTAVM, CTP_TAXA, CTO_CRITER, etc.).