What is current-rate method in SAP EC-CS - Consolidation?

SAP Term: current-rate method

• Component: EC-CS

• Component Name: Consolidation

• Description: A method of currency translation. This method distinguishes between the "straight current-rate method" and the "modified current-rate method": Straight current-rate method All balance sheet and income statement item amounts denominated in foreign currency are translated into group currency as per the closing reporting date using the exchange rate valid on that date. Since this a straight translation of values from one currency to another, there are no currency translation differences. Because of the uniform translation using the current exchange rate, the structures of the balance sheets and income statements of the consolidated individual statements remain unchanged. Modified current-rate method There are several forms of the modified current-rate method. The most recommended modified method is where the income statement is viewed as a time period statement and is not translated using the current rate but rather using the rate valid at the time the transaction took place or - to avoid

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• Key Concepts: 
  The current-rate method is a feature of the SAP EC-CS Consolidation component. It is used to convert the financial statements of different companies into a single currency. This method uses the exchange rate that is valid on the date of the consolidation to convert the financial statements. 
  
  How to use it: 
  To use the current-rate method, you must first set up the exchange rate in the SAP system. This can be done by entering the exchange rate in the “Exchange Rate” field in the “Currency” tab of the “Company Code” screen. Once this is done, you can select the “Current Rate” option when consolidating financial statements. 
  
  Tips & Tricks: 
  When using the current-rate method, it is important to ensure that you are using the most up-to-date exchange rate. This will ensure that your consolidated financial statements are accurate and reliable. 
  
  Related Information: 
  The current-rate method is just one of several methods available for converting financial statements into a single currency. Other methods include historical rate, average rate, and spot rate. Each of these methods has its own advantages and disadvantages, so it is important to consider which one is best suited for your particular situation.