Use

All open items in foreign currency are valuated as part of the 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 to a separate expense or revenue account for exchange rate differences as an offsetting posting.

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 in the amount of 1,700 EUR remains in 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).

Prerequisites

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

Expense and revenue accountsfor the exchange rate differences from the valuation

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, instead, it is posted to a separate account. This is necessary for example, since the accounts for receivables and payables are only updated by postings to the customer and vendor accounts. However, the 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 Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Valuate → Foreign Currency Valuation → Prepare Automatic Postings for Foreign Currency Valuation.

When performing a valuation of open items, you can configure account determination according to the currency type, so that, for example, currency gains in the local currency and in the group currency are posted to separate accounts.

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, 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 the 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 postings for exchange rate differences

You can reset 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.

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 on that key date, it is not possible to reset the valuation for the item.

Reversing exchange rate difference postings

On the specified reversal date or in the reversal period, the posted exchange rate differences are automatically reversed after the valuation run by an inverse posting.

Activities

To perform a foreign currency valuation, from the SAP Easy Access screen, choose Accounting → Financial Accounting → General Ledger/Accounts Receivable/Accounts Payable → Periodic Processing → Closing → Valuate → Foreign Currency Valuation (New).