Currency Type and Currency Type Exceptions

When currency conversion is performed, different types of accounts need to be converted at different rates. For example, Income Statement accounts are usually converted using an AVG (average monthly) rate whereas Balance Sheet accounts are typically converted using an EOM (End of Month) rate.

To address each conversion need, create exchange rate type members, which you assign to accounts. Exchange rates are defined for each exchange rate type. The table below depicts different accounts and account types with varying exchange rate types (currency types).

Currency exceptions come into play when the exchange rate type must be different for a specific subsidiary. For example, you might have a subsidiary experiencing hyper-inflationary conditions resulting is fixed assets needing to be converted at a Historical exchange rate versus an EOM rate. The table below depicts the same accounts and account types provided in the table above WITH a currency exception defined for company 2's Fixed Asset account.