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Strategy - D365 Trial Balance Migration for foreign currency Equity balances


#Microsoft #D365F #DataMigration #Equity #CurrencyTranslation #Historical



The focus of this blog is migration of Equity trial balances for new legal entities with a foreign accounting currency

(different currency than the accounting currency of the consolidation legal entity).


Our examples will highlight USD infusions to an Australia company.

Currencies used:

USD Transaction currency

AUD Accounting currency


We will use the following Legal Entities and corresponding Accounting Currencies


  • C001 USD

  • US01 USD

  • AU01 AUD


Recommended strategy

Recommended approach is to load monthly trial balance activity since the beginning of time using accurate transaction currency and rates for the applicable date for all Equity transactions.


The recommended approach is often deemed to be too much effort, and clients desire a workaround so they have less periodic uploads for the legacy trial balance data.


Workarounds

A usual rapid workaround is to load all beginning balances as of a particular date.

Then if the trial balance has immaterial differences vs. published financial statements, the variance is 'pushed' via a top side journal to an elimination company.

Published financial statements are then 'trued up' to prospectively match D365.


Scenario A and Scenario B (below) will illustrate two versions of workarounds providing a more accurate strategy than above.


Demo Data

Scenario A and B (below) will demonstrate strategies using this demo data.


Note: APIC added to Australia company in USD

1/15/2018 $1,000,000 USD

2/15/2020 $ 350,000 USD

All other transactions are in AUD


Reminder: The Australia company (AU01) has AUD as the assigned Accounting Currency.


Scenario A


This is a hybrid approach to the recommended monthly migration for AU01.

Default exchange rates have been accurately populated for

  • 01/15/2018 USD:AUD

  • 12/31/2018 USD:AUD

The USD APIC transactions are migrated on the proper date 1/15/2018.

All other transactions are migrated on 12/31/2018


Subsequent years would be migrated in similar fashion for APIC (with preloaded currency rates).


Beginning Retained Earnings values for 2020 would then be populated using native D365 Year end process.


Scenario B


Scenario B is a more drastic approach to the recommended monthly migrations:

initial migration will be in 2019 for only balance sheet accounts.


Per our demo data: minimizes effort for migrating a single year (2018).

Strategy benefit:

The concept is applicable for minimizing effort for migration of multiple years.


In this scenario, equity transactions are detailed at the proper historical rates but have 'repurposed (hijacked) dates in the current year to represent each historical equity transaction.


Default currency rate table has been updated prior to posting the migration journal.

i.e.

12/1/2019 rates in lieu of 1/15/2018 rates

12/2/2019 rated in lieu of 12/31/2018 rates


Note: in each year, we have separated the equity transactions so that unique rates can be applied.



Summary Recap

We have now migrated equity transactions using accurate historical rates.


When we process Consolidation, online, in our consolidaition company (C001) we can setup the Currency Translation settings for:AU01 equity accounts to use the default exchange rate with the 'transaction date' settings.


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