Professional Documents
Culture Documents
Foreign Currency Valuation in SAP ECC 6 PDF
Foreign Currency Valuation in SAP ECC 6 PDF
ECC 6
Foreign Currency Valuation
We carry out the foreign currency valuation before we create the financial
statements. The valuation includes the following accounts and items:
Currency Customizing
Defining the Valuation Method
Defining the G/L account for exchange rate differences from the valuation.
We must also specify balance sheet adjustment accounts for receivable and
payable accounts
Path in IMG:
SAP Net weavers -> General Setting -> Currencies -> check the
exchange rate type.
The below screen appears. Either we can use the existing entries or create a
new entry. If we create a new entry save the data .For our example, we will
be using the Exchange rate determination M Standard Translation at
average rate.
Step 2: Maintain the translation Ratio: (T-Code: OBBS)
Path in IMG:
SAP Net weavers -> General Setting -> Currencies -> Define
translation ratios for Currency translation
We update the data through New Entries and save the data.
Step 3: Maintain Currency exchange Rate, Validity period (T-code:
OB08)
In direct quotation, one unit of foreign currency is quoted for the local
currency, whereas in indirect quotation, one unit of local currency is
quoted for the foreign currency. We update the data through New Entries
and save the data to the system.
Path in IMG:
SAP Net weavers -> General Setting -> Currencies -> enter the
exchange rates.
In our example, we will maintain indirect quotation between USD and EUR
Step 4: Configuration of Valuation Method (T-Code: OB59)
Once we select the new entry, another screen to select the valuation
procedure and the exchange rate determination appears as below:
Let us further discuss about the various Valuation procedure/ method
available for configuration
Reset: If we select this parameter then the open items are valuated at the
acquisition price. This way the valuation difference is set to Zero. The old
valuation method is reset. The account determination is reversed: The
revenue that arises is posted to the expense account.
Determine rate type from Account balance : If we select this field, the
account balance/group balance in the relevant foreign currency is used to
determine the exchange rate type. This is relevant for account balance
revaluation.
Once the below appears, we can create a new entry and mention a valuation
area along with the valuation method and company code currency. For our
example, we have the R0 as Valuation area and R001 as Valuation Method.
Step 6: Assign the Valuation areas and Accounting Principles:
Once the valuation area is defined in the above step assign with the
accounting principle as shown in the below screen. As per our example,
valuation area R0 is assigned with accounting principle GAAP
Path in IMG:
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)
Path in IMG:
In this screen we will enter the Exchange rate difference Key, Expense
account and E/R gains.
Exchange rate difference key can either be blank or we can enter a key with
4 digits e.g. 0001. In case we create this exchange rate key then the same
has to be updated in the GL code of the foreign currency account i.e. control
data tab which has the field exchange rate difference key. Only when it is
attached the system will revalue the foreign currency account.
Expense account and E/R gains need to be filled with the GL account created
for unrealized foreign exchange loss or gain. The loss/gain on Revaluation is
unrealized and will be reversed in the next month. We can have two
separate accounts or the same account
Save the data. With this the configuration Part for foreign Currency valuation
is completed.
The exchange rate is probably different at the time of closing, and open
items need to be valuated again. A program valuates the open items using
the new exchange rate and enters the valuation difference in the valuation
line items. It also creates the valuation posting.
Let us see how to execute the foreign currency valuation. For our example,
we have one foreign vendor 100032 and we will valuate on a key date
29-03-2011
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.
Once updated, click F8 to execute. The output will appear in the screen as
shown below. Points to be noted are:
a) Messages box should contain a green box and should not show any errors.
b) Select the amount in document currency and document currency from the
layout and check out the exchange rate.
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.