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Use

This function is used by all of the programs in the Inflation Accounting solution for Financial Accounting (FI). You use these programs to adjust G/L accounts, payables, and receivables to account for the inflation rate as published in inflation indexes.

Features

The system:

  • Ensures that you adjust all items – G/L account balances, line items, or open items – without inadvertently missing out any days, by recording the last adjustment date

  • Allows you to work with an unlimited number of inflation indexes

  • Allows you to take into account bookkeeping assumptions that you have to make about new items (by means of time base and exposure to inflation variants )

  • Posts all inflation adjustments to the general ledger using inflation adjustment documents

  • Allows you to differentiate between specific inflation adjustments and general inflation adjustments (see inflation adjustment split )

Activities

When you come to run the programs in the Inflation Accounting solution for FI, the system adjusts each G/L account as follows:

  • It determines which inflation index to use.

If any of the line items on the account have inflation indexes, the system adjusts them with these. For the others, it uses the index that you have assigned to the inflation key. If you have not entered an inflation index in the inflation key, the system uses the one that you have entered in the inflation method.

  • It then calculates the net inflation rate .

To do so, it takes the inflation index value as per the last adjustment date and from the date that you have entered on the program selection screen. Note that, irrespective of which index format you maintain your inflation index values in, the system always calculates the inflation rate using the accumulated index.

If the system looks for an inflation index value for a particular date, but you have not maintained a value for that date, the system will determine the value on that date automatically. To do so, it assumes that inflation progresses at a constant rate between any two inflation values. So, for example, if you enter an inflation index value for 31 January (1,500) and one for 28 February (1,510), but want to calculate inflation as at 14 February, it will assume that the inflation index on that date is 1,505.