Valuating Foreign Currency Balance Sheet Accounts

Use

Your foreign currency balance sheet accounts are valuated as part of the foreign currency valuation:

  • The balance, that is, the foreign currency balance of the G/L account managed in the foreign currency, forms the basis of the valuation for each foreign currency and foreign currency balance sheet account.

  • The result of the valuation is posted to the valuated account or to an adjustment account.

  • The exchange rate profit or loss from the valuation is posted as an offsetting posting to a separate expense or revenue account for exchange rate differences.

    Example Example

    The balance of your fixed term deposit account (foreign currency balance sheet account) has a balance of 1,000 USD and 1,700 EUR (see the following figure, 1 ). An exchange rate devaluation occurs at the time of the valuation. The account balance is now valuated with an exchange rate of 1.6300. The valuation programs posts the exchange rate difference to the fixed term deposit account and to the account for exchange rate differences (see following figure, 2 ).

    End of the example.

    Note Note

    As a result of the valuation, a difference arises in your local currency. However, only postings in the foreign currency specified in the master record (account currency) can be made to foreign currency balance sheet accounts. The exchange rate difference is therefore posted with a foreign currency amount of zero and a local currency amount equal to the exchange rate difference.

    End of the note.

Prerequisites

To valuate your foreign currency balance sheet accounts, you need to define your expense and revenue accounts for exchange rate differences. You can group your foreign currency balance sheet accounts and define for each group expense and revenue accounts for exchange rate differences.

You group the accounts using an exchange rate key in the master record of the foreign currency balance sheet accounts. In Customizing, assign the expense and revenue accounts for exchange rate differences to this exchange rate difference key.

Make this setting in the Implementation Guide for Financial Accounting (New) under Start of the navigation path General Ledger Accounting (New) Next navigation step Periodic Processing Next navigation step Valuate Next navigation step Foreign Currency Valuation Next navigation step Prepare Automatic Postings for Foreign Currency Valuation. End of the navigation path (For more information, see also under "Example").

Note Note

For more information on the Customizing settings, see Foreign Currency Valuation .

End of the note.

Features

You have the following options when defining the expense and revenue accounts for exchange rate differences:

  • If you perform parallel valuations with different valuation methods, you can also use your account determination from the valuation of open items in foreign currency for a specific G/L account. To do this, enter the G/L account in the account determination for the valuation of open items in foreign currency. If you have implemented parallel ledgers, the balance of the account is read from the ledger in question and valuated.

  • You can reset the valuations. By doing so, you recreate the status before the valuation run, that is, all valuations posted are set to zero by an inverse posting. To reset the valuations, enter the same selection criteria for the valuation run to be reset and set the Reset Valuations indicator.

    Note Note

    However, the valuations are only reset when a valuation is performed for the same key date and with the same valuation area. If an item is not valuated for that key date, it is not possible to reset the valuation for the item.

    End of the note.

  • You can subsequently reverse the valuation of the balances. For this, set the Reverse Postings indicator.

Activities

To perform foreign currency valuation and to post the valuation difference, go to the Start of the navigation path SAP Easy Accessscreen and chooseAccounting Next navigation step Financial Accounting Next navigation step General Ledger Next navigation step Periodic Processing Next navigation step Closing Next navigation step Valuate Next navigation step Foreign Currency Valuation (New) End of the navigation path or call program FAGL_FCV.

  • To subsequently reverse the postings generated during foreign currency valuation, select the same report.

    In the area For G/L Account Balance Valuation on the Foreign Currency Valuation selection screen, set the Reverse Postings indicator. (This indicator does not affect how open items are valuated).

  • To perform foreign currency valuation manually, go to the SAP Easy Access screen and choose Start of the navigation path Accounting Next navigation step Financial Accounting Next navigation step General Ledger Next navigation step Posting Next navigation step Valuate Foreign Currency. End of the navigation path

  • For more information about the available programs, see Foreign Currency Valuation .

Example

Customizing for exchange rate difference using exchange rate difference key

You want to analyze the exchange rate profits and losses arising on foreign currency balance sheet accounts and securities accounts in USD separately. To do this, you create in Customizing separate expense and revenue accounts for exchange rate differences for these USD accounts. You create a joint expense account and joint revenue account for exchange rate differences for all other currencies. You can include the currency and the type of asset (for example, foreign exchange or security) in the exchange rate difference key.

Exchange rate difference key

Description

1USD

Foreign exchanges in USD

1

Foreign exchanges in other currencies

2USD

Securities in USD

2

Securities in other currencies

This example would require the following IMG entries in the activity Prepare Automatic Postings for Foreign Currency Valuation in the process Exch. Rate Diff. using Exch. Rate Key :