Chapter 3: Multicurrency

CHAPTER 3: MULTICURRENCY
Objectives
The objectives are

Complete the setup steps that are required for exchange rate
adjustments

Run exchange rate adjustments in General Ledger

Run exchange rate adjustments in Accounts Receivable and

Accounts Payable

Introduction
Microsoft Dynamics AX 2009 works with multiple currencies and provides
several methods to meet the accounting requirements in different countries. The
General Ledger Setup course in the Financials I collection explains the basics of
setting up currencies and exchange rates. This course describes advanced
currency topics, such as exchange rate adjustments.
Exchange rates constantly fluctuate. Therefore, exchange rate adjustments are
necessary for correct periodic accounting. If you do not periodically adjust to
reflect the current rates, foreign amounts that you convert and post to the General
Ledger, and then display in reports can be misleading.
HINT: The default company currency and secondary currency are designated on
the Other tab in the Company information form. To access the Company
information form, click Basic, click Setup, and then click Company information.

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Setup
When a company works with multiple currencies, it must be able to track any
profits or losses caused by fluctuating exchange rates.

Procedure: Set Up Exchange Rate Profit and Loss

Accounts
Set up the accounts to track profits or losses caused by exchange rate fluctuations
on the Exchange rates form. Follow these steps to set up profit and loss accounts
to register the exchange rate fluctuations.

FIGURE 3.1 EXCHANGE RATES FORM, POSTING TAB

1. Click General ledger, click Setup, and then click Exchange rates.
2. Highlight a currency, and then click the Posting tab.

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Chapter 3: Multicurrency
3. Specify the following ledger accounts to track currency profits and
losses:
Realized loss - The account number in the ledger for posting
realized loss in the current currency. This calculates when
settlement occurs.

Realized profit - The account number in the ledger for posting

realized profit in the current currency. This calculates when
settlement occurs.

Unrealized loss - The account number in the ledger for posting

unrealized loss in the current currency. This calculates when an
Exchange Adjustment is processed.

Unrealized profit - The account number in the ledger for

posting unrealized profit in the current currency. This calculates
when an Exchange adjustment is processed.

When you set up the exchange rate accounts, Microsoft Dynamics AX 2009 is
ready to run the exchange rate adjustments.

Currency Rounding
Set up rounding criteria when you set up a currency. For example, the Turkish
currency Lira can be rounded to a full 100 Lira every time, whereas U.S. dollars
are rounded to the nearest ten cents.
When you perform rounding:

Sums round off according to a fixed unit.

Different rounding options for the Accounts Receivable and

Accounts Payable modules and for prices exist.

All posting amounts round off to the nearest factor of the specified
unit, regardless of whether the system calculates and posts them or
the user enters them manually.

Procedure: Set Up Currency Rounding

Follow these steps to set up currency rounding.
1. Click General ledger, click Setup, and then click Exchange rates.
2. In the Exchange rates form, click the currency, and then click the
Round-off tab.
3. Enter round-off values in the following fields:
General round-off - Specify the general unit for rounding.

Round off order - Enter the unit for rounding off amounts on
sales orders.

Round off purchase - Enter the unit for rounding off amounts
on purchase orders.

Rounding price - Enter the unit for rounding off prices.

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4. After you set up the round-off values, define how that rounding
operates related to the round-off field. In the Rounding from fields
select from one of the following:

Normal - Round up numbers five and greater and round down

numbers four and less.

Downward - Round down all numbers.

Rounding-up - Round up all numbers.

CAUTION: The value entered in the General round-off field affects all values in
all modules. Therefore, enter the value 0.01, as this is the smallest unit for all
amounts within the whole system that includes, for example, the posted tax
amounts.

FIGURE 3.2 EXCHANGE RATES FORM, ROUND-OFF TAB

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Chapter 3: Multicurrency
Test Your Knowledge
1. Select which of the following Posting accounts can be set up in Microsoft
Dynamics AX 2009 for exchange rate adjustments. (Select all that apply)
( ) Realized Profit
( ) Unrealized Profit
( ) Realized Loss
( ) Unrealized Loss

Exchange Rate Adjustments

When a company conducts business in multiple currencies, it is important to
adjust balances to account for exchange rate fluctuations. Sometimes rate
changes can be significant. Therefore, balances must reflect the same rate.
When you make exchange rate adjustments, make the adjustments in Accounts
Receivable and Accounts Payable or in the General Ledger.
CAUTION: Only adjust exchange rates from Accounts Receivable and Accounts
Payable or General Ledger. If, for example, exchange rates are adjusted for
customers by using the Accounts Receivable module, do not at the same time
adjust exchange rates in the General Ledger module.
Users can perform exchange rate adjustments on:

Ledger accounts in General Ledger

Customers in Accounts Receivable

Vendors in Accounts Payable

NOTE: The process for Accounts Receivable and Accounts Payable is the same
except for the menu the process is accessed from and the module that it affects.

Scenario: Use Exchange Rate Adjustments

The default company currency for Contoso is USD. However, the company very
frequently interacts with companies in many other currencies.
For example, Arnie, the Accounts Receivable Administrator, makes a Canadian
dollar (CAD) entry on an account. The balance converts to its equivalent in U.S.
dollars by using the current exchange rate for CAD, which is defined in the
Exchange rates form.
If at a later date the exchange rate changes and the balance on the account must
be updated, Arnie runs an unrealized exchange adjustment to update the balance
to reflect the current exchange rate.

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Procedure: Set Up a Ledger Account for Exchange
Adjustments
Follow these steps to include a ledger account in exchange adjustments.
1. Click General ledger, and then click Chart of Account Details.
2. Select an account, and then click the General tab.
3. Select the Exchange adjustment field. Immediately when you select
it, the transactions posted to that ledger account are included in
exchange rate adjustments.
4. If the Exchange adjustment field is selected and if the account is a
Balance, Fixed Asset, or Liability account, specify how the account
must be handled at the time of the adjustment by selecting or
clearing the Monetary field.

When the Monetary field is selected, during revaluation the

system revalues the account by using the exchange rate of the
date that is entered in the To Date field in the Exchange
adjustment form. For example, do this in a liquidity account,
because you should know how much liquidity the company has
at the time of the exchange adjustment.

If the Monetary field is cleared, during revaluation the system

revalues the account by using the exchange rate of the
transaction date.

NOTE: After you set up a currency to be included in the exchange adjustments,

you can view the current balance in foreign currencies from the Chart of
accounts form by clicking the Balance button, and then clicking Balance by
currency.

FIGURE 3.3 CHART OF ACCOUNTS FORM, GENERAL TAB

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Chapter 3: Multicurrency
Procedure: Run Exchange Rate Adjustments in General
Ledger
Follow these steps to run exchange rate adjustments in the General Ledger.
1. Click General ledger, click Periodic, and then click Exchange
adjustment to process exchange rate adjustments on the eligible
ledger accounts.
2. In the From Account and To Account fields select the range of
accounts that the adjustment must affect.
3. In the From Date and To Date fields select the dates for the desired
exchange rate adjustment. Use the To date to find the exchange rate
to use for the exchange rate adjustments.
4. In the From Currency code and To Currency Code fields specify
whether the adjustment is for one currency or for a range of
currencies. If you are running one currency, enter the same currency
in each field.
5. Select the Adjust profit & loss accounts field to determine whether
you must adjust profit and loss accounts. For example, a user might
have made the appropriate adjustment for the balance sheet accounts,
but must revise the calculation for the profit and loss accounts.
6. Select the Adjust balance sheet accounts field to determine whether
you must adjust balance sheet accounts. For example, clear this field
if you do not have to adjust the balance sheet accounts in the middle
of the month when you run the exchange adjustment.
7. If necessary, click the Batch tab to set up batch processing.
8. Click OK to run the process.
NOTE: If a secondary currency is set up, make exchange adjustments separately
for the default and secondary currency by selecting the different currencies in the
From Currency Code and To Currency Code fields.

FIGURE 3.4 LEDGER - EXCHANGE ADJUSTMENT FORM

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Accounts Receivable and Accounts Payable Exchange Rate

Adjustments
The Exchange adjustment form in Accounts Receivable and Accounts Payable
differs from the Exchange adjustment form in General Ledger. Use the
Accounts Receivable and Accounts Payable Exchange adjustment form to:

View all exchange adjustments in the Exchange adjustment form.

List one transaction for each exchange adjustment with an audit trail
linked to view Voucher transactions.

View the exchange adjustment transactions.

Print reports to view and analyze the exchange rate adjustment

transactions.

Mark exchange rate adjustments as reviewed.

Select the exchange rate adjustments to view in the Show list.

Print a Simulation report to view an estimate of the exchange

adjustment that occurs if an exchange adjustment is run.

Before you run the exchange adjustment, make a simulation to determine the
effects of the exchange adjustments.

Scenario: Exchange Adjustment Simulation

Phyllis, the Accounting Manager at Contoso, wants to know the overall effect of
the exchange adjustment before she runs the exchange adjustment and therefore
decides to run a simulation. The exchange adjustment simulation report will
show Phyllis the overall financial effects of running the exchange adjustment on
open customer transactions with a particular method, considered date, or date of
rate.

Procedure: Simulate an Exchange Adjustment

Follow these steps to run a simulation of an exchange rate adjustment by a
considered date.
1. Click Account receivable or Accounts payable, click Periodic, and
then click Exchange adjustment.
2. Click the Simulation button.

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Chapter 3: Multicurrency
3. In the Method list, select the exchange adjustment method from the
following:
Standard - Make adjustments based on the exchange rate used
on the date specified in the Date of rate field.

Minimum - Make an adjustment if a loss occurs, but not if a

profit exists.

Invoice date - The program offsets any exchange adjustment

that is not already offset. This causes the transaction being
valued at its original value.

4. Select the Considered date on which Microsoft Dynamics AX 2009

finds all transactions that are open on that date and makes an
exchange adjustment if it is necessary. Transactions that are open on
this date, but are settled before the exchange adjustment date, adjust
in the periodic job.
5. In the Date of rate field, enter the date of rate. The date of rate
determines the exchange rate used in the exchange adjustment.
6. Click the Select button to limit and sort the data to include in the
report.
7. Click the Options button to determine how to print or save the
report.
8. Click OK to view the report. The simulation report lists the open
balances in the originating currency and the company currency. The
report lists exchange rates used in the simulation.

FIGURE 3.5 CUSTOMER - EXCHANGE ADJUSTMENT SIMULATION FORM

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Scenario: Run an Exchange Rate Adjustment
Consider the following scenario:

April, the Accounts Payable Administrator at Contoso, is behind

with the invoicing.

The period's closing date is January 31.

April settles an invoice February 3.

When all entries for the period are complete, Phyllis, the Accounting
Manager, starts the unrealized exchange adjustment.

Phyllis runs an exchange adjustment on February 5, but with a

considered date of January 31.

The invoice settled February 3 also must be exchange adjusted by

January 31.

The exchange adjustment includes all transactions with open

amounts on the considered date. This includes transactions that are
currently settled, but were open on the considered date.

Procedure: Run Exchange Rate Adjustments from

Accounts Receivable
Follow these steps to run an exchange rate adjustment from the Accounts
Receivable module to adjust rate on specified customer transactions.
NOTE: Unlike General Ledger adjustments, there is no setup required for
individual customers.
1. Click Accounts receivable, click Periodic, and then click Exchange
adjustment.
2. From the Exchange adjustment form, click the Exchange
adjustment button.
3. In the Method list, select the exchange adjustment method from the
following:
Standard - Make adjustments based on the exchange rate used
on the date specified in the Date of rate field.

Invoice date - Make adjustments based on the exchange rate

used on the invoice date.

Minimum - An adjustment is made if there is a loss, but not if

there is a profit.

4. Enter the Considered date on which Microsoft Dynamics AX 2009

finds all transactions that are open on that date and makes an
exchange adjustment if it is necessary.

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Chapter 3: Multicurrency
5. In the Date of rate field, enter the date of rate. Depending on the
exchange adjustment method selected, the transactions are adjusted
in relation to the exchange rate for the date entered.
6. In the Dimension list, select which dimension to use for the
exchange rate adjustment:
None - Dimensions are not used.

Table - The dimensions are retrieved from the customer table.

Posting - The dimensions are taken from the customer

transaction.

7. Click the Print field to print a report of the exchange rate

adjustment.
8. Click the OK button to run the exchange adjustment.
NOTE: The fields on the right side of the window are optional. Click the Select
button to open a query window to limit criteria to specific customers, currency
codes, and so on. If there are no selections in these fields, the adjustment runs
over all customers and currency codes and may take additional time.

Procedure: View Exchange Adjustment Transactions

When the exchange adjustment process is complete, follow these steps to review
the transactions.
1. Click Accounts receivable, click Periodic, and then click Exchange
adjustment, or click Accounts payable, click Periodic, and then
click Exchange adjustment.
2. Select the exchange adjustment of interest.
3. Click the Voucher button to view the ledger transactions created by
the selected exchange adjustment. There can be several ledger
voucher lines for each customer or vendor transaction that is created
by the exchange adjustment.
4. Click the Transactions button to view the customer or vendor
transactions created by the selected exchange adjustment.

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Lab 3.1 - Accounts Receivable Exchange Rate Adjustment

Scenario
Arnie, the Accounts Receivable Administrator at Contoso, is asked by Ken, the
Controller, to confirm whether the exchange rate adjustment process was run for
customer 2104 - Cheetah Concert Hall for 11/01/2008. If it has not been run, Ken
asks Arnie to run the process by using the following information.
Field

Value

Method

Standard

Considered date

11/01/2008

Date of rate

11/01/2008

Use posting profile from

Posting

Posting profile

Gen

Dimension

None

Challenge Yourself!
With the information that was provided, help Arnie run the exchange adjustment.

Need a Little Help?

1. Review the currency code, balances, and transaction details for
customer 2104.
2. Determine whether the exchange rate was entered for the currency
assigned to 2104.
3. Run the exchange rate adjustment.

Step by Step
First, review the customer information.
1.
2.
3.
4.

Click Accounts receivable, and then click Customer Details.

Locate customer 2104.
Click the General tab and note the contents of the Currency field.
Click the Balance button and note the different amounts in the
Balance Currency and Balance fields.
5. Click the Open Transactions button and note the values in the Date
and Amount Currency fields.
6. Close the forms.

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Chapter 3: Multicurrency
Next, verify each currency has an exchange rate set up.
1.
2.
3.
4.

Click General ledger, click Setup, and then click Exchange rates.
In the Overview pane, click the line for CNY.
In the Exchange rate pane, verify a line is entered for 11/1/2008.
Close the form.

Run the exchange rate adjustment.

1. Click Accounts receivable, click Periodic, and then click Exchange
adjustment.
2. From the Exchange adjustment form, click the Exchange
adjustment button.
3. In the Considered date field, click the calendar icon to select
11/1/2008.
4. In the Date of rate field, enter 11/1/2008.
5. Click the Select button.
6. Click in the Criteria field in the line with the field Customer
Account, enter 2104.
7. Click OK.
8. Click OK.
9. Close the Exchange Rate Adjustment form.
Review the customer information for any updates.
1. Click Accounts receivable, and then click Customer Details.
2. Locate customer 2104.
3. Click the Balance button and note the different amounts in the
Balance Currency and Balance fields.
4. Close the forms.

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Summary
Transactions in Microsoft Dynamics AX 2009 can be recorded in various
currencies, even on the same debtor/creditor or ledger account. This is necessary
for correct periodic accounting; several calculation methods are available to meet
the accounting requirements in different countries.
Posted unrealized exchange rate adjustments are automatically reversed when a
new exchange rate adjustment job is run or when a realized exchange rate
difference is posted - for example at settlement.

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Chapter 3: Multicurrency

Test Your Knowledge

Test your knowledge with the following questions.
1. In what modules does Microsoft Dynamics AX 2009 provide functionality to
run exchange rate adjustments? (Select all that apply)
( ) General Ledger
( ) Accounts Payable
( ) Accounts Receivable
( ) Fixed Assets
2. What three options are available to determine where dimensions will be
retrieved for posting? (Select all that apply)
( ) Table
( ) None
( ) All
( ) Posting

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this
chapter
1.

2.

3.

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Chapter 3: Multicurrency

Solutions
Setup
1. Select which of the following Posting accounts can be set up in Microsoft
Dynamics AX 2009 for exchange rate adjustments. (Select all that apply)
() Realized Profit
() Unrealized Profit
() Realized Loss
() Unrealized Loss

Test Your Knowledge

1. In what modules does Microsoft Dynamics AX 2009 provide functionality to
run exchange rate adjustments? (Select all that apply)
() General Ledger
() Accounts Payable
() Accounts Receivable
( ) Fixed Assets
2. What three options are available to determine where dimensions will be
retrieved for posting? (Select all that apply)
() Table
() None
( ) All
() Posting

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