Finance came to me with a question about Advanced IC JE and Currency Revaluations We have a couple JEs that hit Child Sub 1 (CAD) . At the end of the month finance performs an Advanced Intercompany JE (USD) to move the monthly payments from Child Sub 1 to the Parent Sub. This appears to be resulting in a currency revaluation every month.

JE#1
Subsidiary - Child Sub 1
Currency - CAD
9/15/2023

Expense Account C -- Debit:5
Other Current Liability Account B  -- Credit:5

JE#2
Subsidiary - Child Sub 1
Currency - CAD
9/30/2023

Expense Account C -- Debit:5
Other Current Liability Account B -- Credit:5

Advanced Intercompany JE

Subsidiary - Parent Sub
Currency - USD
9/30/2023

Parent Sub -- Other Current Asset Account A -- Debit:10 -- USD @ 1
Parent Sub -- Other Current Liability Account B -- Credit:10 -- USD @ 1
Child Sub -- Other Current Liability Account B -- Debit:10 -- CAD @ 1.35
Child Sub -- Other Current Asset Account A -- Credit:10 -- CAD @ 1.35

Now the obvious thought seems to be to turn off revaluation on the account (Other Current Liability Account B), but I was wondering is there a better way to handle these kinds of transfers?

Well, you must perform revaluation (and translation that comes before revaluation) per ASC 830. (unless you are not in the US and/or do not care about GAAP or IFRS). I am not sure of the reason why Finance moves payments from one sub to another, but that’s how revaluation works at the consolidated level where all transactions must be in the same (USD in your case) currency. There isn’t another way to do it. But perhaps there is a better way to deal with the transfer to begin with, and I would look into that were I in your shoes

This is the specific question that was asked:

"We need the ability for the Intercompany JE to post the Canada lines in its base currency not in the USD currency.  Otherwise, the amounts booked to Canada will be in the account in USD and it keeps revaluing and does not clear out."

I did get some more clarity and have better understanding of what's happening. • They are making payroll entries each month in Child Subsidiary (CAD). • They reclass the liability to Parent Subsidiary Books using Advanced I/C Entry (USD) using the end of month rate. USD/CAD so zero out the balance on the CAD side. • However it appears that the CAD side of the Adv IC entries is what is building this USD balance and that is what keeps revaluing each month. Is there a better way to do this kind of transfer?

Hi @Chris

Herro, @Karina, I think you mean a different @Chris?

indeed!

That's what NetSuite Support told me, but I was trying figure out a way to handle this without turning the function off for that exact reason.

in your case it would not make any difference as IC AP and IC AR’ sole purpose is to be used in UI transactions

ok thank you.

that’s an interesting point. I would look into the purpose of the transaction - does it have to post like this? Meaning this payroll is for a purpose to pay employees that provide services; thus they must be earning it > there is IC revenue to be captures for which they can be paid instead of just moving payroll from one sub to another. On a different note - the other side of the reval is gain/loss balance, has your Finance ever looked at it?

How do you mean? They just consider currency reval in general the issue so I don't think they looked into that specifically?