Currency Conversion issue for YTD model

Question

Hello,
Currently our Client is using YTD (year to date) model to maintain data into BPC 7.5NW, and planning to use BPC for currency conversion from LC to USD. They are not converting the values in Transactional system. When performing this all Balance sheet accounts will be using YTD model for conversion, but income statement accounts should be using Periodic values for conversion.
We have two different Entity FX types: one is USDFNC - USD functional and NUSDFNC - Non USD functional. One of the differences between these two FX types is CTA account, USDFNC is using expense Account to Book CTA and NUSDFNC is using Equity Account to book CTA.
To achieve the above mentioned requirement, I did configure BPC as follows:
1) Use RATE type AVG (average for Income statement accounts)
2) Use RATE type END (spot rate for Balance sheet Accounts)
3) In business rules for Account rate type AVG- formula would be [AVG], apply to periodic flag will be checked.
5) in business rules for Account Rate Type END - Formula would be [END], apply to periodic flag will be blank.
6) To calculate CTA for ENTITY FX type- NUSDFNC, I configured the following in Account Rate type AVG - destination account is equity account, Formula is [END]-[AVG], apply to periodic flag will be blank and Entity FX type is NUSDFNC.
7) To calculate CTA for ENTITY FX type- USDFNC, I configured the following in Account Rate type AVG - destination account is expense account, Formula is [END]-[AVG], apply to periodic flag will be blank and Entity FX type is USDFNC.
Above configuration is giving me correct converted result for all Balance sheet accounts and income statement accounts are showing the correct values when I use the formula (current period LC amount-previous period LC amount)*(current period AVG rate). But I saw difference in Balance sheet, so further analyzed CTA (currency Translation Accounts) and found that the difference is because of CTA amount only. Similar CTA differences exist for both USDFNC entities and NUSDFNC entities. So, I think my logic to calculate CTA is not working.
I am using the standard script logic to run Currency Conversion:
*RUN_PROGRAM CURR_CONVERSION
     CATEGORY  = %CATEGORY_SET% 
     TID_RA = %TIME_SET%
     CURRENCY = %RPTCURRENCY_SET%
     RATEENTITY = GLOBAL
*ENDRUN_PROGRAM
*COMMIT
Can any one help me to understand whether this configuration is correct? I feel that I may need to change the logic for calculating CTA. But not sure about what and where
Edited by: amarnathputta on Nov 24, 2011 5:36 AM

Answer 1

Thank you Ethan,
Let me try to explain this with few dollar amounts:
Let us consider that I have data for 1st month (Jan) of the year 2011,
Net income for Jan. 2011 in LC = 59916152.19
Net income for Jan. 2011 in USD calculated using Average rate is  = $ 9,223,013.14
CTA for the same month is  (net income in LC X spot rate) - net income in USD at average rate =((59916152.19)*(0.154617))-9223013.14 = 41,042.564
This value is correct.
For the month of Feb 2011:
Net income for Feb.2011in LC = 60415519.01
Net income for Feb.2011 in USD at average rate (with periodic flag on) = 9,300,112.38 ( I calculated this value manually and it is correct after conversion)
calculated CTA for the same month is (60415519.01*0.154083)-9300112.38 = 8,892.035.
But actually BPC calculated CTA is 18,547.56 (I felt that this may be because I am not using the Flag apply periodic value while calculating CTA and when I flagged that, BPC is giving me a very big difference in CTA)
My balance sheet is exactly off with the difference in CTA.
Hope this helps you to understand my problem.
Edited by: amarnathputta on Nov 25, 2011 2:43 PM