EXCHANGE RATE VARIANCE IS BEING CHARGED TO THE PO CHARGE ACCOUNT

Doc ID: AG0956

Subject: EXCHANGE RATE VARIANCE IS BEING CHARGED TO THE PO CHARGE ACCOUNT

Type: Knowledge

Last Revision Date: 30-Jul-08

Status: Closed

Owner: Shen/Kevin

Request

Divine requested to solve problem that exchange rate variance was calculated by system automatically during AP invoice matching and some invoices fall under MO-Spare parts:4501800600/MO-Indirect materials account：4501800300, but should be fall to either Foreign Exchange Gain Realized: 5601101000 or Foreign Exchange Gain Unrealized: 5601102000.(Refer to AG0956_01)

Solutions

1.[25-Jul-08] Divine requested to solve problem that exchange rate variance was calculated by system automatically during AP invoice matching and some invoices fall in wrong account.(Refer to AG0956_02)

2.[29-Jul-08] Shen asked Lucy for some advices. Lucy said that if the PO distribution is an expense type, the rate variance gets charged to the PO charge account.(Refer to AG0956_03)

3.[29-Jul-08] We also found note[1072205.6] on Metalink.

Subject:	EXCHANGE RATE VARIANCE IS BEING CHARGED TO THE PO CHARGE ACCOUNT
	Doc ID:	Note:1072205.6	Type:	PROBLEM
	Last Revision Date:	14-JUN-2005	Status:	PUBLISHED

Problem Description: 
===================
 
        You are using multiple currencies.
        You have a corporate exchange rate set up in Purchasing.
        You create a PO with this exchange rate.
        
        In Payables, you enter an invoice with a user rate that is
        different from the exchange rate that is on the PO.

        The exchange rate variance is being charged to the PO charge
        account (the expense account on the distribution line on the
        PO).

        You were expecting the exchange rate variance to go to the
        Rate Variance Gain/Loss accounts that you set up by
        navigating in Payables to:

                Setup -> Options -> Financials -> Accounting
                
                GL Accounts:
                        Rate Variance Gain
                        Rate Variance Loss
        
Search Words: 
============ 

        multi-currency PO charge account exchange rate variance

Solution Description: 
====================

        If the PO distribution is an expense type, the rate variance
        gets charged to the PO charge account.  

        If the PO distribution is an inventory type of distribution
        (asset account), it gets charged to the exchange rate variance
        gain/loss account setup in system options.  In Payables, the 
        exchange rate variance gain/loss accounts are set up by navigating 
        to:

                Setup -> Options -> Financials -> Accounting
                
        The Rate Variance GL Accounts are called:

        Rate Variance Gain
        Rate Variance Loss

4.[29-Jul-08] We found the note from Oracle® Payables User’s Guide Release 11i Part No. A81180-07.(Refer to AG0956_04)

5.[29-Jul-08] The content of note[1072205.6] on Metalink is the same as that Lucy said. So the case is normal.

6.[29-Jul-08] Divine confirmed that the case is normal.(Refer to AG0956_05)