Professional Documents
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ECC 6
Foreign Currency Valuation
This is the process to translate and adjust foreign currency amount of
monetary accounts to local amount by a current suitable exchange rate
(standard exchange rate).
We carry out the foreign currency valuation before we create the financial
statements. The valuation includes the following accounts and items:
1.
We update the data through New Entries and save the data.
Path in IMG:
Financial accounting (New) General Ledger Accounting
(New) Periodic Processing Valuate Define Valuation Methods.
Once we select the new entry, another screen to select the valuation
procedure and the exchange rate determination appears as below:
Step 7: Create two G/L accounts to record the Gain/Loss from the
foreign currency valuation and one Balance sheet adjustment
account:
We need to create two G/L account in FS00, One for Gain/Loss Unrealized
Foreign Currency Revaluation and the other one for Gain/Loss Realized
Foreign Currency Revaluation
Also we need one more Balance sheet adjustment account for Receivable or
payable (adjustment account) to post the foreign currency valuation of open
items. (Since we cannot post the reconciliation account directly)
For our example, we have 700400 as Gain/Loss Realized Foreign Currency
Revaluation, 700420 as Gain/Loss Unrealized Foreign Currency Revaluation
and 121020 as Customer receivables domestic (adjustment account)
Path in IMG:
Financial accounting (New) General Ledger Accounting
(New) Periodic Processing Valuate Foreign Currency
Valuation Prepare Automatic posting for Foreign Currency
Valuation.
In the below shown Screen shot we need to update the GL accounts as a new
entry.
In Our example, we have 121000 as GL account (Reconciliation account) for
customers, 700400 as Realized Gain/loss on Exchange rate determination,
700420 as unrealized gain/loss in the Valuation tab and Finally 121020 as
Balance Sheet adjustment account for Customers.
Save the data. With this the configuration Part for foreign Currency valuation
is completed.
Execution of the Foreign Currency valuation:
Before we start with the execution of the foreign valuation, we need to make
sure the exchange currency rate is maintained in the transaction code OB08
First Step:
Post few entries in FB60/FB70 in foreign currency .In our example we take
FB60.
Second step:
Enter the company code, Key date and Valuation area in the First part. In the
second part, First tab fill the Batch Input name to process the batch,
Document date and posting date to post the entry after valuation. We should
not check create posting now. We should first see the test result and then
come back and click create posting.
In the second part, Second tab select the vendor / customer/ GL account for
which we need to valuate the open items. In our example, we are going to do
the valuation for one Vendor 100032. So select the valuate vendor and fill
the vendor account number. If we select the customer, vendor and GL and
leave the account number blank, the system will valuate all the accounts.
a)
b)
Once updated, click F8 to execute. The output will appear in the screen as
shown below. Points to be noted are:
Messages box should contain a green box and should not show any errors.
Select the amount in document currency and document currency from the
layout and check out the exchange rate.
Third Step:
Once we have checked the details and confirm that there is no error, we will
go back to first screen, First part and check the box Create posting.
The output will be with the box showing 3 messages and 2 posting.
If we click the 3 message box we get the display of the messages as below
Fourth step:
We need to process the batch input. Either we can go through the path menu
system ->Services -> Batch Input -> Session or use T-Code SM35.
System will take us to the below screen where we need to Process the batch
Once we click the process tab we get a dialogue to select the processing
mode and additional function.
Once the batch processing is completed we see a tick mark in the second
column. If we get any errors we need to check the log and fix the errors.