Hi, our accounting team is looking at updating an Equity GL account so that the general rate type is “current” instead of “historical”. When I tested this in sandbox, it looks like prior months have adjusted amounts on the balance sheet. Is it simply the reports that will be different or are transactions actually being impacted? Are there any other consequences of making this change?

Sorry, this does not answer your question but out of curiosity, what's that equity account with current rate type?

It will only impact open period(s). And, well, this is not GAAP what you are doing, just FYI, you may not care about it though. And test, test, test

Luis - this equity account is for employees being awarded equity as part of compensation. Karina - are you saying that it is not GAAP compliant to use ‘current’ rate for an equity account? I do not have an accounting background so I truly don’t know. Thanks.

you should be using historic rate for this, your accountant should know that. the premise is you are using the rate at the time stock was awarded. Say, you awarded stock in Jan 2024; with historical rate it will not be revaluing; however with the current rate that stock value will keep revaluing every period. But if you are adding stock monthly there is no harm - until it is (when you stop doing it and the value of stock keeps revaluing…. revaluing…. revaluing..)

Thanks Karina. I will discuss this with our internal accountant.

so probably not GAAP, and they are not tired to record CTA every period 🙂