Using the component Actual Costing/Material Ledger, you can manage values for materials in up to three currencies. If you use the parallel valuation functions, the values in each currency can also represent a separate valuation view (such as legal valuation, group valuation, and profit center valuation).
The combination currency/valuation is also called a valuation approach.
The system enables historical currency translation for valuation-relevant transactions. This means that items are translated using the exchange rate that was valid at the time of posting that item.
Currency amounts that come from stock valuation, invoice verification, material cost estimates and order settlement are translated into the other currencies in the respective areas and updated in the material ledger.
You post an invoice receipt. The system translates the amount into the currencies managed in the material ledger at the current exchange rate.
You settle a production order that is managed in two currencies/valuations. The values in the production order correspond to currencies/valuations that are managed in the material ledger. These values are not translated in the material ledger, but rather transferred directly. The amount in the third currency is translated from the company code currency using the average rate.
You mark a standard cost estimate, which has results in two currencies/valuations. The results are not translated in the material ledger, but rather transferred directly. The amount in the third currency is translated using the amount in the company code currency and the exchange rate at the time of marking.
For the actual costing, the system calculates new valuation prices and new inventory values independently of each other in the different currencies/valuations.
This procedure also means that over a period of time the price of a material could rise in one currency while falling in another.
In Customizing for Financial Accounting, you can determine whether translations should be made starting from the transaction currency (currency in which an individual document is generated in the system) or from the company code currency. You can also determine which exchange rate type should be used for the translation (for example, the average rate).
In the standard system, exchange rate differences are calculated by comparing the exchange rates at goods receipt and invoice receipt. In Customizing for Invoice Verification, you can specify that exchange rate differences should not be calculated using the exchange rate at goods receipt, but with an assumed exchange rate, which can be valid (for example) for a whole year or a part of a year. Using these Customizing settings, you can also specify that all exchange rate differences are to be regarded as price differences.
See also:Multiple Value Flows in Financials Multiple Values for Material Inventory with the Material Ledger