Skip to main content

The intercompany balances between two companies with differing functional currencies are displaying a difference each month. We believe the reason for this is that transactions are being entered in differing currencies on each entity and this is through automatic processes in the system, e.g. transferring stock between companies and therefore there is not control of the transactional currency because the functional currency is what the stock in valued at in the respective companies. 

Following these transactions being posted, revaluation is happening in one company only therefore the balance is not reconciling to the balance in the other company. 

Are you keeping currency rates updated and revaluated?

Hello,

As per my understanding, if intercompany balances we are referring to are belonging to the same legal entity, they should not be revaluated at all - they are subject of elimination in reporting process. 

In case of different legal entities, we should use sale/purchase pattern, where, in case of e.g. transferring stock between companies we have cost of good sold in selling/issuing company and unbilled purchase receipt in buying/receiving company. Perhaps then simple stock transfer should not be used here at all.

 

Reply


Terms & ConditionsCookie settings