You can use this function to translate the data records from a source key figure (such as the local currency) to a target key figure (such as the group currency).

You can individually specify a source key figure for each selection, or a common one for the method layout. The target key figure is taken from the permanent parameters when the task is executed.

You may want to use different exchange rate types depending on which group of accounting objects you want to translate. Say, you want to translate long-term assets at historical exchange rates, inventory at current rates, and income statement items at average rates.

You define the exchange rate types in the SAP Implementation Guide at General Settings ® Currencies ® Check Exchange Rate Types and Enter Exchange Rates.

You may want to use different currency translation keys depending on which group of accounting objects you want to translate. Say, you want to translate cumulative balances for stockholders' equity, but periodic balances for retained earnings.

Currency translation supports the following currency translation keys:

Periodic translation uses data that belongs to the current period. By contrast, cumulative translation uses data that belongs to the entire fiscal year.

LC = local currency; GC = group currency

When the value decreases, you can determine that the period value is translated using the average rate, which stems from the prior periods of the fiscal year.

This example uses periodic translation.

The system calculates the average rate for period 3 as follows:

(1,500 + 2,000) / (1,000 + 1,000) = 1.75