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Foreign currency valuation

To create your financial statements, you have to perform a foreign currency valuation.
Account balances and open items posted in foreign currencies are required to be valuating at
a specific date before preparing the financial statements.
 You can only perform a valuation run once for each valuation area for a specific key
date.

Step 1: Define exchange rates (OB08), Define exchange rate ratios (OBBS), Define
exchange rate key type (OB07)
Step 2: Define valuation methods.
Step 3: Define valuation area.
Step 4: Assign valuation area to accounting principles.
Step 5: Maintain GL accounts (FS00).
Step 6: Prepare automatic postings for foreign currency valuation (OBA1)
Step 7: Post the invoice in transaction data. Run the foreign currency valuation program
(FAGL_FC_VAL)
Step 8: Run batch input session (SM35)

Step 1:
 Define exchange rates (OB08)

 Define exchange rate ratios (OBBS)

 Define exchange rate key type (OB07)

Step 2: Define valuation methods.


Path: IMGFinancial accounting (new) General ledger (new) Periodic
processingValuate Define valuation method.

To perform a foreign currency valuation in new General Ledger Accounting, you need to
have specified in Customizing which valuation method is applied.
Structure
In a valuation method, you make the following specifications for the foreign currency
valuation:
 The valuation procedure to be used, for example, lowest value principle
 How the exchange rate differences determined should be posted, for example, which
document type should be used
 The basis on which the exchange rate should be determined, for example,
which exchange rate type, should be used.
The valuation method can be following under valuation procedures, it be depend on client
requirement.

 Lowest value principle: The Valuation will be posted only if it is giving a negative
result
 Strict lowest value principle: It will be post valuation only if two conditions
happened

 The valuation is negative


 The new valuation has a greater devaluation and/or a greater revaluation for
credit entries than the previous valuation

 Always Valuate : No matter if it is positive or negative, the valuation will be posted


 Revalue only: The opposite of the first one, valuation is only posted when positive.

This method can be used for multiple charts of accounts


Step 3: Define valuation area.
Path: IMG Financial Accounting (new) General Ledger (new) Periodic
ProcessingValuateDefine Valuation Area

The valuation area maintain 2 digits of ID to define an area for valuation, mandatory to maintain a
valuation method, currency types, and additional currencies

With the valuation areas, you can report different valuation approaches and post to different
accounts.

 In foreign currency valuation, the saved valuation differences are not used to
calculate the realized exchange rate differences.

Step 4: Assign valuation area to accounting principles.


Path: IMG Financial Accounting (new) General Ledger (new) Periodic
ProcessingValuate  Assign Valuation Area to Accounting Principles.
For data to be posted automatically to your parallel ledgers
Assign accounting principle to valuation area.
Step 5: Maintain GL accounts (FS00).
Maintain following GL accounts for foreign currency valuation
ACCOUNT GROUP ACCOUNT DISCRIPTION
Asset Bank/cash account, Sundry debtor
Expanses Realization loss & un Realization loss accounts
Incomes Realization gains & Un Realization gains accounts
Liability Sundry creditor, Balance sheet adjustment account

Step 6: Prepare automatic postings for foreign currency valuation (OBA1)

Path: IMGfinancial accounting general ledgerperiodic processingValuate foreign


exchange valuation Prepare automatic postings for foreign currency valuation [OBA1]

Maintain procedures for following keys,

 Exchange rate diff. using Exchange rate key – KDB


 Exchange rate Diff: open items/GL account – KDF
Step 7: Post the invoice in transaction data. Run the foreign currency
valuation program (FAGL_FC_VAL)

Step 8: Run batch input session (SM35)