Temporal Translation Differences (SAP Library

Temporal Translation Differences

Use

In your consolidated financial statements you may want to determine how exchange rate fluctuations have an effect on the FS item values in group currency. You may like to display these effects separately.

A change in the group currency value, which occurs exclusively through a change in the exchange rate, is called temporal translation difference. On the other hand the change in the group currency value, which occurs through a change in the local currency value, is called transaction difference.

An example for the requirement to display temporal translation differences is the asset history sheet in group currency. In an asset history sheet, you present the changes of the asset values from the opening balance to the closing balance. At the fiscal year change, the closing balance of the old year is transferred to the opening balance of the new year. If during this change, the exchange rate (current exchange rate) changes, then the opening balance in the new year (calculated with the new exchange rate) does not agree with the closing balance of the old year (calculated with the old exchange rate). In this case it useful to display this temporal translation difference.

The temporal translation differences in an asset history sheet can be displayed in the subitems of the FS items of the transferred assets. For FS items where this procedure is not possible (no breakdown by subitem), the SAP currency translation offers a separate display of temporal translation differences in the totals records.

Prerequisites

Displaying temporal translation differences is only possible and useful for currency translation keys 1, 9 or 7.

Features

Asset History Sheet: Displaying Temporal Translation Differences in Subitems

You will find a detailed explanation in the process description Asset History Sheet Reporting.

Displaying Temporal Translation Differences in the Totals Records

In the Customizing of currency translation, in fact in the definition of translation entries, you can set the indicator temporal translation difference, The indicator has the following effect:

The system calculates temporal translation differences between the periods, within a fiscal year
The system displays the temporal translation differences under a translation indicator and generates separate totals records.

Table: Differentiation of the totals records with the translation indicator

Transl. ind.	Period value in local curreny	Period value in group currency
0	LC value of transaction	Reference value of transaction
1	Value 0	Delta between value in group currency and reference value of the transaction
2	Value 0	Delta between old reference value and new reference value and for the prior period values Therefore: the temporal translation difference on the basis of the change in the reference exchange rate
3	Value 0	Change of the deltas between value in group currency and reference value and for the prior period values Therefore: the temporal translation difference for the delta between value in group currency and reference value

The separated display of the temporal translation differences is reset for the balance carried forward, that means

the totals records with translation indicator 2 go into the totals records with translation indicator 0.
the totals records with translation indicator 3 go into the totals records with translation indicator 1.

Examples

Example 1: Translation for the reference exchange indicator, therefore no currency translation differences

Scenario: The reference exchange rate changes from 1.5 (period 000) to 1.6 (period 012)

Totals records in 1998

FS Item	Transl. ind.	Period: 000 Ref. exchange rate: 1.5		Period: 012 Ref. exchange rate: 1.6		Period: 012 cumulative
FS Item	Transl. ind.	LC	GC	LC	GC	LC	GC
123456	0	1,000	1,500	100	160	1,100	1,660
123456	2	0	0	0	100	0	100

Note:

The change of the reference exchange rate between period 000 and period 012, results in the temporal translation difference of 100 (1000 LC * 0.1 GC/LC) for the value 1,000 from period 000.

The system calculates the difference as follows:

	Reference value cumulative to period 012	1,760
-	Reference value cumulative to prior period	1,500
-	Reference value of period 012	160
=	Temporal translation difference at the prior period	100

Totals records in 1999

FS Item	Transl. ind.	Period: 000 Ref. exchange rate: 1.6		Period ... Ref. exchange rate ...
FS Item	Transl. ind.	LC	GC	LC	GC
123456	0	1,100	1,760	…	…
123456	2	0	0	…	…

Note:

For the balance carried forward, the temporal translation difference of 100 goes into the totals record with translation indicator 0, so that the cumulative value in group currency is 1,760 in the balance carried forward period.

Example Translation to an exchange rate which is unequal to the reference exchange rate, therefore currency translation differences arise

Scenario:

The reference exchange rate changes from 1.6 (period 000) to 2.0 (period 012). The exchange rate stays the same.

Totals records in 1998

FS Item	Transl. ind.	Period: 000 Ref. exchange rate: 1.6 Exchange rate: 1.7		Period: 012 Ref. exchange rate: 2.0 Exchange rate: 1.7		Period: 012 cumulative
FS Item	Transl. ind.	LC	GC	LC	GC	LC	GC
123456	0	1,100	1,760	100	200	1,200	1,960
123456	1	0	110	0	-30	0	80
123456	2	0	0	0	440	0	440
123456	3	0	0	0	-440	0	-440

Note:

As the exchange rate differs from the reference exchange rate, in period 000 a currency translation difference of 110 is displayed under translation indicator 1.

The change of the reference exchange rate between period 000 and period 012 results in two temporal translation differences.

Temporal translation difference 1 under the translation indicator 2 is 440 (1,100 LC * 0.4 GC/LC).

Temporal translation difference 2 under the translation indicator 3 is 440- (1,100 LC * 0.4 GC/LC-).

The system calculates the temporal translation difference 1 as follows:

	Reference value cumulative to period 012	2,400
-	Reference value cumulative to prior period	1,760
-	Reference value of period 012	200
=	Temporal translation difference 1	440

The system calculates the temporal translation difference 2 as follows:

	Value in group currency cumulative to period 012	2,040
-	Value in group currency cumulative to prior period	1,870
-	Value in group currency of period 012	170
-	Temporal translation difference 1	440
=	Temporal translation difference 2	-440

Totals records in 1999

FS Item	Transl. ind.	Period: 000 Ref. exchange rate: 2.0 Exchange rate: 1.7		Period: ... Ref. exchange rate: ... Exchange rate: ...
FS Item	Transl. ind.	LC	GC	LC	GC
123456	0	1,200	2,400	…	…
123456	1	0	360-	…	…
123456	2	0	0	…	…
123456	3	0	0	…	…

Note:

For the balance carried forward, the temporal translation difference 1 of 440 in goes into the totals record with translation indicator 0, so that the cumulative value in group currency is 2,400 in the balance carried forward period. The temporal translation difference 2 of 440- goes into the totals record with translation indicator 1, so that the cumulative value in group currency is 360- in the balance carried forward period.