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Weighted-Average Translation (WAT) for Retained Earnings and YTD Net Income

WAT addresses 2 issues at the same time, even for customers running on a single currency.

  1. Fixes how YTD Net Income is translated.  Prior to 2018.2, YTD Net Income would be calculated then translated at the End of the Month (EOM) rate.  This meant that in consolidated currencies the YTD Net Income was incorrectly stated.  WAT addresses this issue to yield the correctly translated results
  2. Both Retained Earnings and YTD Net Income need formulas to track time, and adjust if it was the first month of the year.  WAT simplifies that process with the Reset Balance and Transfer Balance on Reset options.  This is true even for single currency customers

For detailed setup steps you can search the knowledge center for:  Create Weighted-Average Translation Accounts

WAT can work in conjunction with Currency-Tagged Splits to allow you to enter the opening balance for Retained Earnings in each consolidating currency to eliminate the need for numerous historical rates.  For detailed setup steps you can search the knowledge center for:  Set up Currency-Tagged Splits for Initial Balances

Things to know

  • With WAT setup, YTD Net Income will correctly calculate throughout the year, at the end of the year it will reset to 0 and transfer its balance to the Retained Earnings account
  • Both accounts need to be setup as “Actuals by” and “Planned by” Delta as we will setup formulas to calculate the period impact on the account.  It will automatically carry the balance forward
  • Typically, the Reset Balance will be set to year.  This replaces the need for formulas that check to see if it’s month 1 to do what the Reset Balance just does
  • Retained Earnings will be setup with a Master Formula of 0.  This is because there is no longer a need for formulas in the Retained Earnings account.  It will start with the Initial Balance and receive the balance of the YTD Net Income account as part of the Balance Transfer on Reset every year end
  • The YTD Net Income account is a root account in Adaptive Insights, it can’t be deleted and it can’t be re-parented.  If you wish to have a setup like below you will need to add a new YTD Net Income account and rename (and maybe repurpose) the root account, not using it for this purpose

Retained Earnings, Ending Balance

Retained Earnings, Beginning Balance

YTD Net Income

Other uses for WAT

Any YTD account can be setup with WAT.  If multi-currency the values will be correct but even if single currency, it eliminates the need to use formulas to reset the account in the first month of the year.  Here are some examples

  • YTD Sales
  • YTD Orders
  • Cumulative Expenses

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