ANS-0551 · ACCOUNTING & FINANCIAL CONFIGURATION
How Does NetSuite Calculate the Average Consolidated Exchange Rate?
Understand the specific methodology NetSuite employs for calculating average exchange rates for consolidated financial reporting, focusing on subsidiary-level calculations.
Short answer
NetSuite calculates the average consolidated exchange rate on a per-subsidiary basis using the formula SUM(GL Impact x Exchange Rate)/SUM(GL Impact). This calculation considers only postings to accounts with a rate type of Average, using the exchange rate between the subsidiary's base currency and its closest parent's base currency as of the transaction date, as defined in the Currency Exchange Rates table.
Scenario
Users often seek to understand the precise methodology NetSuite utilizes for calculating average consolidated exchange rates, particularly when dealing with multiple subsidiaries reporting in different currencies. Discrepancies or unexpected values can arise if the underlying calculation logic, especially regarding subsidiary-specific rates and the definition of the exchange rate, is not fully understood.
Solution
NetSuite calculates the average consolidated exchange rate on a per-subsidiary basis. This means that even for the same currency pairings, two subsidiaries reporting in the same currency (e.g., CAD) rolling up to the same parent in another currency (e.g., USD) may have different average rates.The calculation follows this formula:
SUM(GL Impact x Exchange Rate)/SUM(GL Impact)Only postings to accounts configured with a rate type of Average are included in this calculation.The 'Exchange Rate' component of the formula corresponds to:
The exchange rate between the subsidiary's base currency and its closest parent's base currency (from child to parent).
The rate as defined in the currency exchange rate table, accessible via
Lists > Accounting > Currency Exchange Rates.The rate as of the transaction date.
Expert NetSuite Support
Need help with this NetSuite issue?
Accounting & Financial Configuration consulting and configuration support