Cost Transactions Unexpected Translation Rate from Primary Ledger to Secondary Ledger

Summary:

The Primary Ledger of our Mexico plant is in MXN.
The Secondary Ledger is in USD with the same COA, Calendar and Accounting Method as the primary ledger.

The conversion from the Primary Ledger to Secondary Ledger is set as Subledger level, using Spot Rate and Retain Transaction Rate Type.

According to the business substance and the accounting regulatory, our finance team insist that the functional currency of the Mexico plant should be USD and non-monetary assets should be translated from Primary Ledger (MXN) to Secondary Ledger (USD) in historical rate.

From cost perspective, it means that any inventory issue transactions (like miscellaneous issue, WIP material issue, goods sold issue …) should be accounted and translated to USD secondary ledger by using the same conversion rate as the cost layer (the source of the inventory, e.g., purchase receipt, miscellaneous receipt …).