In FCCS consolidation, if a base entity currency has a parent entity with a different default currency, what happens?

• A. Foreign currency translation occurs
• B. No translation occurs
• C. Data is eliminated
• D. Intercompany elimination occurs

Answer: (A)

In FCCS, all entities must be reported in a single currency for the consolidated results. When a base entity uses a different currency than the parent’s default currency, the system must translate the child’s financials into the parent currency. This foreign currency translation converts the child’s amounts using the configured rate types, so the consolidated statements are in the parent’s currency. Translation often produces translation adjustments tracked in equity (OCI) due to differences between rates and actual movements. Intercompany elimination is a separate process that removes intercompany transactions, not caused by the currency difference.