Currency translation methods for consolidating financial statements
You should therefore always post to equity accounts in transaction currency = group currency, and at the same time ensure that absolutely accurate translation into group currency takes place, be it by entering the exchange rate manually.
The Consolidation system currently stores its own additional journal entry history for these sensitive business transactions affecting equity and investment items.
On the consolidated balance sheet, owner equity is stated either at spot exchange rates or at historical exchange rates.
Within consolidation of investments during the year of acquisition the equity (or portion thereof) is cleared against the corresponding investment book value of the acquiring company, and goodwill (or another clearing item) is activated for the amount of the difference.
This section covers the aspects and functionality of currency translation, which result from the need to portray the statements of foreign companies in group currency as a part of the consolidated financial statements.
The Consolidation system provides so-called currency translation methods for this purpose.