Valuation of Open Items in Foreign Currencies

Use

All open items in foreign currency are valuated during foreign currency valuation:

  • The individual open items of an account in foreign currency form the basis of the valuation, that is, every open item of an account in foreign currency is valuated individually.

  • The total difference from all the open items in an account is posted to a financial statement adjustment account. The account therefore retains its original balance.

  • 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

    You have posted a receivable in the amount of 1,000 USD, at an exchange rate of 1.7000. The local currency is EUR. The system saves the receivable in local currency in the customer and receivables accounts (1,700 EUR) (see following figure, 1 ).

    An exchange rate devaluation occurs at the time of the valuation, and the exchange rate is now 1.6300. The receivable of EUR 1,700 remains on the receivables account. The program posts the reduction to the receivable (70 EUR) to a financial statement adjustment account and the exchange rate difference to the account for exchange rate differences from the valuation as an offsetting posting (see following figure, 2 ).

    The receivables account and the relevant financial statement adjustment account are reported in one item in the financial statements. This means that the amount of the receivable in the financial statements is the valuated amount (1,630 EUR).

    End of the example.

Prerequisites

To valuate your foreign currency balances, you must define certain accounts. You define these accounts per reconciliation account:

  • Expense and revenue accounts to which the exchange rate differences from the valuation are posted

  • A financial statement adjustment account , reported in one financial statement item with the valuated account. The valuation is therefore not performed in the account itself but posted instead to a separate account. This is necessary because the accounts for receivables and payables, for example, are only updated by postings to the customer and vendor accounts. However, valuation must be performed in the G/L account area for the relevant reconciliation accounts.

You define the required accounts in the Implementation Guide under Start of the navigation path Financial Accounting (New) Next navigation step 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

Note Note

When valuating open items, you can configure account determination according to the currency type. In this way, currency gains in the local currency and in the group currency are posted to separate accounts, for example.

End of the note.

Features

You have the following options for valuating open items in foreign currency:

  • Saving the exchange rate difference per valuation area

    In addition to the posting, the exchange rate differences are saved per document. This information is then available for subsequent evaluations, for example for Transferring and Sorting Receivables and Payables

    • Unrealized exchange rate differences

      When you valuate open items in foreign currency, the exchange rate difference determined is posted as an unrealized exchange rate difference.

    • Realized exchange rate differences

      For an incoming payment, that is, when you are clearing open items, the current exchange rate is determined. Since the exchange differences that were not realized are reversed, the full exchange rate difference is posted as realized.

  • Resetting exchange rate difference postings

    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.

  • Reversing exchange rate difference postings

    The posted exchange rate differences are automatically reset on the specified reversal date or reversal period by an inverse posting after the valuation run.

Activities

To perform a foreign currency valuation, 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 End of the navigation path or Start of the navigation path Accounts Receivable/Accounts Payable 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 . For more information about this program, see Foreign Currency Valuation .