Use conversion rate types to automatically assign a rate when you:
1. convert foreign currency journal amounts to your ledger currency equivalents
2. run Revaluation
3. run Translation or Remeasurement
You enter daily conversion rates for specific combinations of foreign currency, date, and conversion rate type. When you enter a foreign currency journal, General Ledger automatically displays the predefined exchange rate based on the currency, rate type (unless you are using the User rate type), and conversion date you enter. When you have a User rate type, you enter the rate directly when you enter a foreign currency journal.
Note: If you want to enter different daily rates for the same combination of from-currency, to-currency, and conversion date, you must define separate conversion rate types.
General Ledger provides the following predefined daily conversion rate types:
Spot : An exchange rate which you enter to perform conversion based on the rate on a specific date. It applies to the immediate delivery of a currency.
Corporate : An exchange rate you define to standardize rates for your company. This rate is generally a standard market rate determined by senior financial management for use throughout the organization.
User: An exchange rate you specify when you enter a foreign currency journal entry.
You can use these predefined rate types to enter exchange rates, or you can define additional conversion rate types. After defining a conversion rate type, enter daily rates using that rate type.
Using Period-End and Period-Average Rates in Translation
According to SFAS #52 and IAS 21, the period-end rate represents the rate at the balance sheet date and the period-average rate represents the average exchange rate. General Ledger uses Period - average and period-end rates when you translate your actual and budget account balances.
Typically, you use period-average rates to translate income statement accounts and period-end rates to translate balance sheet accounts. The default period-average and period-end rate types must be assigned when you create the ledger.
Oracle General Ledger enables you to assign a conversion rate type for your period-end and period-average rates to comply with the accounting standards. You can assign any conversion rate type as your period-average and period-end rates for the ledger. For example, you can assign the predefined rate type Spot to be used as your period-average rates and the predefined rate type Corporate to be used as your period-end rates. These rate types are used in translation of actual account balances.
For budget account balances, you can specify the period-end and period-average rate types when you submit the translation.
Entering Historical Rates
Enter historical rates or amounts for translating actual and budget account balances.
You can enter rates for any foreign currency you have enabled.
You can assign historical rates to accounts, either individually or by range. Generally, you enter historical rates only for specific balance sheet accounts. For example, you can use historical rates to translate non-monetary and selected owners' equity account balances.
Note: Usually, if you are performing translation, enter historical rates only for owner's equity accounts. If you are performing remeasurement, enter historical rates for owner's equity accounts as well as for non-monetary balance sheet accounts and income statement accounts related to non-monetary items.
If you have average balance processing enabled for your ledger, you need to enter separate historical rates for standard and average balances for specific balance sheet accounts.
Note: If you change a historical rate after you've already run translation, you must retranslate your account balances for the period whose rate has changed.