Reversing Intercompany Accounts

Question

Hi Guru's,
We have some intercompany accounts where the normal behavior will be as below for Non-USD entities. I have used an exchange rate of 1.5.
Account
Description
Account Type
Entity Currency Total
USD Total
INTERCO_PL
Intercompany Income or Expense
Expense
500
750
80001
Interco Intellectual Property Rights Income
Expense
100
150
80002
Interco Rent Income
Expense
100
150
80003
Interco Management Fees Income
Expense
100
150
88888
Interco Gain on Entity Restruct
Expense
100
150
80004
Interco Intellectual Property Rights Expense
Expense
100
150
However one of the accounts, 88888 may need to be translated using a rate other than the average/end rate in the system (ie. Certain equity transactions need to be translated using the rate on the day the transaction took place, and not using an average or month-end rate).  In this case, we will override the system translation to the amount we need it to be based on the rate as of that date.
For this we will over-ride the USD value of the account 88888 using an Over-Ride account as below.
Account
Description
Account Type
Entity Currency Total
USD Total
USD_OVER_IC
US Dollar Overrides Intercompany
Group Label
H_88888
Interco Gain on Entity Restruct Override
Flow
0.000001
0.000001
H_99999
H_11111
The data for the H_88888 will be posted through journals. The rule will copy the data in H_88888 account only if the H_88888 account has a non-zero value. So whenever you want to override the USD value of the 88888 account, a value of 0.000001 will be posted through journals to the H-88888 account. So when the rule finds a non-zero value in H_88888 account, it just copies the value and overrides the USD value of the 88888 account and the entity currency value of 88888 will remain the same.
So now the change will be as below.
Account
Description
Account Type
Entity Currency Total
USD Total
INTERCO_PL
Intercompany Income or Expense
Expense
500
600
80001
Interco Intellectual Property Rights Income
Expense
100
150
80002
Interco Rent Income
Expense
100
150
80003
Interco Management Fees Income
Expense
100
150
88888
Interco Gain on Entity Restruct
Expense
100
0.000001
80004
Interco Intellectual Property Rights Expense
Expense
100
150
The above is fine as per the requirement. However we have another requirement to reverse the INTERCO_PL account. For this, we have another account called REV_INTERCO_PL. This account will get data from the INTERCO_PL account using a simple rule.
HS.Exp "A#REV_INTERCO_PL = A#INTERCO_PL"
But after the copy, the data in the REV_INTERCO_PL is wrong at the USD level as seen below.
Account
Description
Account Type
Entity Currency Total
USD Total
REV_INTERCO_PL
Reverse Intercompany Income or Expense
Revenue
500
750
REV_INTERCO_PL account needs to be equal to INTERCO_PL at the USD level too but a normal translation is happening on the Entity Currency Value of the account.
Could anyone please help me on this?

Answer 1

Hi Kostas,
That was really helpful. You were right about the condition. Please have a look at the rules below.
If bIsBase = True Then
  ' -- Base Entity: Local Currency and Local Currency Adjustment Calculations (Begin)
If (sPovValue = "<Entity Currency>" Or sPovValue = "<Entity Curr Adjs>") Then
   ' -- Perform EBITDA reversal account calculations.
   Call CALC_EBITDA_REVERSALS()
   ' -- Cost of Sales / Cost of Goods Sold Calculations  (Begin)
   If sPovYear >= "2013" Then
    Call CALC_COST_SALES_VER_2(sPovYear)
   ElseIf sPovYear = "2012" And iPovPeriodNum >= 9 Then
    Call CALC_COST_SALES_VER_2(sPovYear)
   Else
    Call CALC_COST_SALES_VER_1()
   End If
   ' -- Cost of Sales / Cost of Goods Sold Calculations  (End)
   ' -- Retained Earnings Calculation: Transfer net income to retained earnings.
   ' -- Note: CY RE is a balance sheet account, i.e. it is always YTD.  Always pull
   ' -- the YTD value, regardless of the scenario's default view (YTD or Periodic) settings.
   HS.Clear "A#49331" & s_NONES_EX_C3
   HS.Exp "A#49331" & s_NONES_EX_C3 & " = " & _
   "A#NI_Meritor.I#[ICP Top].C1#TotCustom1.C2#TotCustom2.C4#TotCustom4.W#YTD"
   ' -- Retained Earnings Opening Balance Calcuation (Begin)
   ' -- Transfer beginning balance retained earnings from last period of prior year to current period.
   If sPovYear > s_APP_START_YR Then
    HS.Clear "A#49311" & s_NONES_EX_C3
    HS.Exp "A#49311" & s_NONES_EX_C3 & " = " & sOpBalScenario & ".P#Last.Y#Prior.A#RE" & s_TOPS_EX_C3
   End If
   ' -- Retained Earnings Opening Balance Calcuation (End)
   ' -- Calculate balance sheet balancing account.
   ' -- Used to force a balanced trial balance at the entity currency level.
   HS.Clear "A#BAL" & s_NONES_EX_C3
   HS.Exp "A#BAL" & s_NONES_EX_C3 & " = " & _
   "A#ASSETS_TOT" & s_TOPS_EX_C3 & " - A#LIAB_CUR" & s_TOPS_EX_C3 & _
   "- A#LIAB_LT" & s_TOPS_EX_C3 & " - A#EQUITY_TOT" & s_TOPS_EX_C3
  ' -- Base Entity Override Rollforwards  (Begin)
   If sDefCurr <> "USD" Then
   ' -- For Period 1, roll forward U.S. Dollar overrides from prior period.
    Call CALC_OVERRIDES_RLFWDS(sValueRight, iPovPeriodNum, sPovYear)   
   End If
  ' -- Base Entity Override Rollforwards  (End)
  ' -- Base Entity Calculations for Non-USD Entities (Begin)
   ElseIf sDefCurr <> "USD" Then
   If sPovValue = "USD" Then
    ' -- Execute U.S. Dollar override calculations.
   Call CALC_OVERRIDES(sPovValue)
   End If
  ' -- Base Entity Calculations for Non-USD Entities (End)
  End If
   ' -- Base Entity: Local Currency and Local Currency Adjustment Calculations (End)
End If
Sub CALC_EBITDA_REVERSALS()
' -- Name: CALC_EBITDA_REVERSALS
' -- Description: Routine performs EBITDA (Earnings Before Interest,
' -- Taxes, Depreciation and Amortization) reversal calculations.
' -- Perform EBITDA calculations.
' --   For this  application we use account type (e.g. asset and revenue) to manage
' --   sign (+/-) of balances.  The source and target accounts have opposing account types.
    HS.Clear "A#REV_MIN"
    HS.Exp "A#REV_MIN = A#82081"
    HS.Clear "A#REV_DISCOPS"
    HS.Exp "A#REV_DISCOPS = A#DISCOPS"
    HS.Clear "A#REV_INCTAX"
    HS.Exp "A#REV_INCTAX = A#INCTAX"
    HS.Clear "A#REV_INT"
    HS.Exp "A#REV_INT = A#NETINT"
    HS.Clear "A#REV_INTERCO_PL"
    HS.Exp "A#REV_INTERCO_PL = A#INTERCO_PL"
    HS.Clear "A#REV_OOB_PL"
    HS.Exp "A#REV_OOB_PL = A#OOB_PL"
    HS.Clear "A#REV_ASSTIMP"
    HS.Exp "A#REV_ASSTIMP = A#ASSTIMP"
    HS.Clear "A#REV_REST"
    HS.Exp "A#REV_REST = A#RESTEXP"
    HS.Clear "A#REV_LOS"
    HS.Exp "A#REV_LOS = A#84711 + A#80919"
    HS.Clear "A#REV_NONPALLOC"
    HS.Exp "A#REV_NONPALLOC = A#NONPALLOC"     
    HS.Clear "A#REV_DEPR.C1#[None]"
    HS.Exp "A#REV_DEPR.C1#[None] = A#Depreciation.C1#Tot_Dept"
    HS.Clear "A#REV_AMORT.C1#[None]"
    HS.Exp "A#REV_AMORT.C1#[None] = A#Amortization.C1#Tot_Dept"
End Sub  ' -- CALC_EBITDA_REVERSALS
CALC_EBITDA_REVERSALS() is the funtion where the account REV_INTERCO_PL account is getting calculated from INTERCO_PL.
As you mentioned, I know I have to modify the condition where the function is called. But there are other rules which depends on the existing condition. So I am afraid this might cause the other rules not work properly which are good now.
Should I create a new condtion for this CALC_EBITDA_REVERSALS alone under Sub Calculate Routine? Please let me know your recommendation.
Thank you,
Siva Bhojan