Splitting of Differences

Use

You can use splitting of differences to analyze the reason for the elimination differences.

The system distinguishes between currency-related elimination differences and other elimination differences:

  • Currency-related differences are incurred if a consolidation unit and its partner unit have the same transaction currency values in a business transaction, but report different group currency values because they use different local currencies and/or exchange rates.

  • Other differences are incurred if a consolidation unit and its partner unit use different ways of reporting business relationships in their financial data.

Possible reasons for the different ways of reporting financial data:

  • The units post their data on different dates

  • The units use different accounting and valuation methods

  • One unit makes an error in posting

By splitting differences you can post currency-related and other differences to different accounting objects.

Prerequisites

When defining the method for interunit eliminations:

  • You select the indicator Per Transaction Currency

  • You select an exchange rate indicator

Furthermore, the following conditions must be fulfilled:

  • The document type that is assigned must post in the transaction currency and the group currency.

  • The accounting objects being eliminated and the differential accounting objects must have a breakdown by transaction currency.

Features

In order to categorize differences, the system reads the FS item values for elimination in both group currency and transaction currency. If elimination differences exist in transaction currency, the system translates these into group currency. The exchange rate indicator you specify in Customizing of the method determines the exchange rate.

The resulting translated value represents the other differences (in group currency). The remaining amount of the entire elimination difference in group currency represents the currency-related differences.

The system posts these differences to the differential accounting objects designated for currency-related differences and for other differences.

Example

You want to eliminate receivables and payables and split elimination differences. The exchange rate for translating the differences from transaction currency (FJD) into the group currency (USD) is 0.4.

Initial data

Item

Posting Level

Transaction Currency

(FJD)

Local Currency

Group Currency

(USD)

Receivables

00

1000  FJD

300  USD

300  USD

Payables

00

1200- FJD

1200- FJD

480- USD

Difference

00

200- FJD

 

180- USD

Analysis of elimination differences

Total difference

 

= 180- USD

Other difference

= 200– FJD * .4

= 80- USD

Currency-related difference

= 180- USD - (80- USD)

= 100- USD

See also: Example: Elimination of IU Payables/Receivables with Splitting of Differences