Asset History Sheet Reporting (Temporal Translation Differences) 

Purpose

Asset history sheets, which show changes in asset values between the opening and the closing balance, are often required as a supplement to both the individual and consolidated financial statements.

If you translate asset values using the current exchange rate for the current period, and not historically by year of acquisition, then temporal translation differences occur if the current exchange rate changes with a new fiscal year. The closing balance for the prior year no longer corresponds to the opening balance of the current year. In asset history sheets, however, these two balances must be identical.

You follow the process described below if you want to report temporal translation differences separately in your asset history sheet. You would want to do this in order to show the correspondence between the closing balance of the prior year and the opening balance of the current year.

Prerequisites

The system must calculate temporal translation differences during currency translation and post them separately, before it can report them in the asset history sheet. This process therefore begins with definition of translation methods.

Process Flow

  1. You define translation methods in Customizing.

    2. – You select the current rate as the reference exchange rate indicator.

    – You make translation entries for the asset items you want to include in the asset history sheet, to specify how temporal translation differences will be handled, as shown in the following table:

    Entries for translation differences

    No.

    Content

    Exchange rate indicator

    Trl. key

    Differential item

    001

    Set of assets items, restricted to the subitem for acquisition and production costs (APC).

    Current rate for last period of prior year

    (indicator in trl. entry)

    1

    Originating item
    Post with the subitem for temporal translation differences in APC.

    002

    Set of asset items, restricted to the subitem for the opening balance of value adjustments.

    Current rate for last period of prior year

    (indicator in trl. entry)

    1

    Originating item
    Post with the subitem for temporal translation differences in accumulated depreciation.

    003

    Set of asset items, restricted to remaining subitems.

    Current rate

    1

    Item for differences from currency translation.

    You select the indicator Exchange rate from the previous year, for translation entries 001 and 002. This means that the system reads the exchange rate from the previous year from the exchange rate table.

  2. You run currency translation. In accordance with the settings you made in your translation entry, the system:

    3. – Calculates temporal translation differences between the current rate for the last period in the prior fiscal year and the current rate for the current period. It does this for acquisition and production costs, and for the opening accumulated depreciation balance.

    – Posts any temporal translation differences to the relevant asset items with the subitems you specified for temporal translation differences.

    – Translates the remaining asset items (acquisitions, depreciation, transfers, and so on) using the current exchange rate for the current year.

  3. In order to determine the structure of your asset history sheet, you define a report with the following line and column layout:

Example data

 

Closing bal. prior yr

Temporal transl. diffs

Open.
bal.

Acquis.

... Clos. bal.

APC

          

Accum. Depr.

          

 

The opening balance equals the closing balance of the prior year plus any temporal translation differences.

Result

You can use the report you defined to generate an asset history sheet which reports temporal translation differences separately.

 

To see how temporal translation differences are calculated and recorded see also Temporal Translation Differences