Foreign Currency Valuation

Use

To create your financial statements, you have to perform foreign currency valuation. Foreign currency valuation covers the following accounts and items:

  • Foreign currency balance sheet accounts, that is, the G/L accounts that you manage in foreign currency.

    The balances of the G/L accounts that are not managed on an open item basis are valuated in foreign currency.

  • Open items that were posted in foreign currency.

    Open items that are open on the key date are valuated in foreign currency.

In foreign currency valuation, you have the following options:

  • You can perform the valuation in local currency (that is, company code currency) or a parallel currency (for example, group currency).

  • You can also use different valuation methods (for example, lowest value principle).

  • If you translate additional currencies from the local currency, foreign currency valuation automatically performs a currency translation in accordance with FASB 52 (US GAAP).

    Caution Caution

    You can only perform a valuation run once for each valuation area for a specific key date.

    End of the caution.

Prerequisites

You have made the following settings in Customizing:

  • You have defined exchange rates.

    For more information, see Exchange Rates.

You have made these settings in Customizing for New General Ledger Accounting in the following activities: Start of the navigation path Financial Accounting (New) Next navigation step General Ledger Accounting (New) Next navigation step Periodic Processing Next navigation step Valuate End of the navigation path.

  • Define Valuation Methods

    You have defined a valuation method here.

  • Define Valuation Areas

    Here, you have defined a valuation area and assigned a valuation method to it.

  • Assign Valuation Areas and Accounting Principles

    You have assigned to the valuation area an accounting principle that is also assigned to a ledger group.

    The exchange rate differences from the parallel valuation are posted in this valuation area. If you perform parallel valuation with a different valuation method to the first valuation, you do not have to reverse the postings of the first valuation. This information is then available for subsequent closing operations, for example Transferring and Sorting Receivables and Payables

  • Start of the navigation path Foreign Currency Valuation Next navigation step Prepare Automatic Postings for Foreign Currency Valuation End of the navigation path.

    Here, you have defined the expense and revenue accounts for exchange rate differences from valuations. For payables and receivables accounts, you additionally need to have defined the financial statements adjustment accounts.

Key Features

Foreign currency valuation comprises the following functions:

  • Valuating Foreign Currency Balance Sheet Accounts

  • Valuation of Open Items in Foreign Currencies

  • Saving the exchange rate differences determined from the valuation per document

  • Posting account assignments in valuation documents:

    • If you use document splitting, the valuation documents are posted with the account assignments that you have defined in Customizing as document splitting characteristics.

    • For balance valuation, you can define additional account assignment characteristics. These characteristics are always updated (even if you do not use document splitting). You define the additional account assignment characteristics in Customizing for foreign currency valuation under Define Additional Account Assignments for Balance Valuation. For more information, refer to the documentation on this Customizing activity.

  • Performing the required adjustment postings

    Note Note

    The following topics describe how you perform foreign currency valuation using a program and how you post valuation differences. You can also make these postings manually. From the SAP Easy Access screen, choose Start of the navigation path Accounting Next navigation step Financial Accounting Next navigation step General Ledger Next navigation step Document Entry Next navigation step Valuate Foreign Currency End of the navigation path.

    End of the note.

Activities

You can use program FAGL_FCV for foreign currency valuation. From the SAP Easy Access screen, choose Start of the navigation path Accounting Next navigation step Financial Accounting Next navigation step General Ledger End of the navigation path or Accounts Receivable or Start of the navigation path Accounts Payable Next navigation step Periodic Processing Next navigation step Closing Next navigation step Valuate Next navigation step Foreign Currency Valuation End of the navigation path.

For more information on the individual functions and on using the program, see the program documentation.