Create Currency Adjustment Journals

Note

This step is required only for subsidiaries whose base currency differs from the parent company's reporting currency.

The currency adjustment process translates each subsidiary's financial information into the parent company's base currency before consolidation.

Before performing currency translation, make sure the GL Ledger Hierarchy has been configured by following Consolidation Setup – GoldFinch Clientcare. Without the GL Ledger Hierarchy, GoldFinch cannot perform currency translation and consolidation.

Create Consolidation Period Exchange Rates

Open the Consolidation Period End Closing record and create one or more Consolidation Period Exchange Rate records.

For each foreign currency, enter the following exchange rates:

• Current Rate
• Average Rate
• Historical Rate

Example

Parent Company Base Currency: USD

Subsidiary Base Currency: CAD

Exchange rates are entered using the following format:

1 USD = Rate × CAD

GoldFinch uses these rates during currency translation based on each GL Account's Consolidate Rate Type.

Create Currency Adjustments

After all exchange rates have been entered and reviewed, click Create Currency Adjustments.

GoldFinch automatically performs the following steps for each subsidiary that requires currency translation.

1. Copy GL Summary Records

Copies the current period's GL Summary records from the subsidiary's Actual GL Ledger to its corresponding Converted GL Ledger.

For example:

• Actual-CA → Actual-CA (USD)
• Actual-Euro → Actual-Euro (USD)

2. Translate Balance Sheet Accounts

Converts the ending balances of all Balance Sheet accounts using the Consolidate Rate Type configured on each GL Account.

Typical rate types include:

• Current – Assets and Liabilities
• Historical – Equity

3. Translate Income Statement Accounts

Calculates the current-period activity for all Income Statement accounts and converts those amounts using the Average exchange rate (or the rate specified by the account's Consolidate Rate Type).

4. Calculate Currency Translation Adjustments

Calculates any translation differences resulting from the currency conversion and updates the Converted GL Ledger.

These adjustments are recorded in the GL Summary records.

5. Post the Cumulative Translation Adjustment (CTA)

Any balancing difference created by the currency translation process is automatically posted to the Cumulative Translation Adjustment (CTA) Account configured in Company Setup.

This ensures that:

• The translated Balance Sheet remains balanced.
• Translation gains and losses are accumulated separately from operating results.
• The converted ledger is ready for consolidation with the parent company.