Temporal Translation Differences 
Use
In your consolidated financial statements you may want to determine how exchange rate fluctuations have an effect on the FS item values in group currency. You may like to display these effects separately.
A change in the group currency value, which occurs exclusively through a change in the exchange rate, is called temporal translation difference. On the other hand the change in the group currency value, which occurs through a change in the local currency value, is called transaction difference.
An example for the requirement to display temporal translation differences is the asset history sheet in group currency. In an asset history sheet, you present the changes of the asset values from the opening balance to the closing balance. At the fiscal year change, the closing balance of the old year is transferred to the opening balance of the new year. If during this change, the exchange rate (current exchange rate) changes, then the opening balance in the new year (calculated with the new exchange rate) does not agree with the closing balance of the old year (calculated with the old exchange rate). In this case it useful to display this temporal translation difference.
The temporal translation differences in an asset history sheet can be displayed in the subassignments of the FS items of the transferred assets. For FS items where this procedure is not possible (no breakdown by subassignments), currency translation offers a separate disclosure of temporal translation differences in the totals records.
Prerequisites
You must use the characteristic translation indicator in the consolidation area.
Recording temporal translation differences is only feasible when doing cumulative translations.
Features
Recording Temporal Translation Differences in the Totals Records
In the Customizing of currency translation, in fact in the definition of translation entries, you can set the indicator temporal translation difference, The indicator has the following effect:
· The system calculates temporal translation differences between the periods, within a fiscal year
· The system displays the temporal translation differences under a translation indicator and generates separate totals records.
Table: Differentiation of the totals records with the translation indicator
|
Transl. ind. |
Period value in local currency |
Period value in group currency |
|
0 |
LC value of transaction |
Reference value of transaction |
|
1 |
Value 0 |
Delta between specific value and reference value of the transaction |
|
2 |
Value 0 |
Delta between old reference value and new reference value and for the prior period values Therefore: the temporal translation difference on the basis of the change in the reference exchange rate |
|
3 |
Value 0 |
Change of the delta between specific value and reference value – that is, for the prior period values Therefore: the temporal translation difference for the delta between specific value and reference value |
This results in the following values:
· 0 + 1 + 2 + 3: specific value
· 0 + 2: reference value
· 1 + 3: currency translation difference
· 2 + 3: temporal translation difference
The separated display of the temporal translation differences is reset for the balance carried forward, that means
· the totals records with translation indicator 2 go into the totals records with translation indicator 0.
· the totals records with translation indicator 3 go into the totals records with translation indicator 1.
Example
Example 1: Translation at the reference exchange indicator, thus incurring no currency translation differences
Scenario: The reference exchange rate changes from 1.5 (period 000) to 1.6 (period 012)
Totals records in 2001
|
Item |
Transl. ind. |
Period: 000 Ref. exchange rate: 1.5 |
Period: 012 Ref. exchange rate: 1.6 |
Period: 012 Cumulative |
|||
|
LC |
GC |
LC |
GC |
LC |
GC |
||
|
123456 |
0 |
1,000 |
1,500 |
100 |
160 |
1,100 |
1,660 |
|
123456 |
2 |
0 |
0 |
0 |
100 |
0 |
100 |
Note:
The change of the reference exchange rate between period 000 and period 012, results in the temporal translation difference of 100 (1000 LC x .1 GC/LC) for the value 1,000 from period 000.
The system calculates the difference as follows:
|
|
Reference value cumulative to period 012 |
1,760 |
|
- |
Reference value cumulative to prior period |
1,500 |
|
- |
Reference value of period 012 |
160 |
|
= |
Temporal translation difference at the prior period |
100 |
Totals records in 2002
|
Item |
Transl. ind. |
Period: 000 Ref. exchange rate: 1.6 |
Period ... Ref. exchange rate ... |
||
|
LC |
GC |
LC |
GC |
||
|
123456 |
0 |
1,100 |
1,760 |
…
|
…
|
|
123456 |
2 |
0 |
0 |
…
|
…
|
Note:
For the balance carried forward, the temporal translation difference of 100 is written to the totals record with translation indicator 0, so that the balance carryforward period contains the accumulated specific value of 1,760.
Example 2: Translation at an exchange rate that is not equal to the reference exchange rate, thus incurring currency translation differences
Scenario:
The reference exchange rate changes from 1.6 (period 000) to 2.0 (period 012). The exchange rate stays the same.
Totals records in 2001
|
Item |
Transl. ind. |
Period: 000 Ref. exchange rate: 1.6 Exchange rate: 1.7 |
Period: 012 Ref. exchange rate: 2.0 Exchange rate: 1.7 |
Period: 012 Cumulative |
|||
|
LC |
GC |
LC |
GC |
LC |
GC |
||
|
123456 |
0 |
1,100 |
1,760 |
100 |
200 |
1,200 |
1,960 |
|
123456 |
1 |
0 |
110 |
0 |
30- |
0 |
80 |
|
123456 |
2 |
0 |
0 |
0 |
440 |
0 |
440 |
|
123456 |
3 |
0 |
0 |
0 |
440- |
0 |
440- |
Note:
As the exchange rate differs from the reference exchange rate, in period 000 a currency translation difference of 110 is displayed under translation indicator 1.
The change of the reference exchange rate between period 000 and period 012 results in two temporal translation differences.
· Temporal translation difference 1 under the translation indicator 2 is 440 (1,100 LC * 0.4 GC/LC).
· Temporal translation difference 2 under the translation indicator 3 is 440- (1,100 LC * 0.4 GC/LC-).
The system calculates the temporal translation difference 1 as follows:
|
|
Reference value cumulative to period 012 |
2,400 |
|
- |
Reference value cumulative to prior period |
1,760 |
|
- |
Reference value of period 012 |
200 |
|
= |
Temporal translation difference 1 |
440 |
The system calculates the temporal translation difference 2 as follows:
|
|
Specific value accumulated up to period 012 |
2,040 |
|
- |
Specific value accumulated up to the prior period |
1,870 |
|
- |
Specific value of period 012 |
170 |
|
- |
Temporal translation difference 1 |
440 |
|
= |
Temporal translation difference 2 |
440- |
Totals records in 2002
|
Item |
Transl. ind. |
Period: 000 Ref. exchange rate: 2.0 Exchange rate: 1.7 |
Period: ... Ref. exchange rate: ... Exchange rate: ... |
||
|
LC |
GC |
LC |
GC |
||
|
123456 |
0 |
1,200 |
2,400 |
…
|
…
|
|
123456 |
1 |
0 |
360- |
…
|
…
|
|
123456 |
2 |
0 |
0 |
…
|
…
|
|
123456 |
3 |
0 |
0 |
…
|
…
|
Note:
For the balance carryforward, the temporal translation difference 1 of 440 is written to the totals record with translation indicator 0, so that carryforward period contains the accumulated specific value of 2,400. The temporal translation difference 2 of -440 is written to the totals record with translation indicator 1, so that the carryforward period contains the accumulated specific value of -360.