The Consolidated Exchange Rates table includes three consolidated exchange rate types. Current, Average, and Historical. The value of a subsidiary account multiplied by its consolidated exchange rate provides the account value in consolidated financial statements.
The consolidated exchange rate types and the types of accounts that use them are as follows:
- Average – The weighted average of the currency exchange rates for all transactions posted during the period to accounts with a rate type of Average. This rate is used to translate accounts in the income statement and to build retained earnings.
- Current – Also referred to as ending rate. This rate is the currency exchange rate that is effective at the end of the reported upon period. This rate is used for most asset and liability accounts in the balance sheet.
- Historical – Same as Average rates, except for accounts with a rate type of Historical. This rate is used for equity accounts and owners’ investments.
Each account has two consolidated exchange rate type values: a general rate type and a cash flow rate type. The general rate type is used for the income statement, balance sheet, and other general purposes. The cash flow rate type is used for cash flow statements.
Following are the default rate types for accounts:
General Rate Type:
- Current – for all balance sheet accounts other than equity accounts
- Average – for all income statement accounts
- Historical – for all equity accounts
Cash Flow Rate Type: Average – for all accounts except equity