Disclosing Currency Reserves (TR-TM-SE) 

Prerequisites

The exchange rates between the participating currencies and the euro are fixed. This may lead to a situation where the book exchange rate between the position currency and the local currency for foreign currency positions deviates from the fixed rate (book exchange rate = book value in position currency divided by the book value in local currency).

The current consensus is that these hidden reserves should be calculated and disclosed for all participating currencies as at 01/01/1999. You can either make a corresponding disclosure in the P&L account or create a special reserve. Such reserves would need to be written off during the course of remaining period or by the end of the dual currency phase. You make the postings to write off the special reserve manually in Financial Accounting.

For a detailed list of the positions for which special reserves have been created and the corresponding amounts, refer to the log of report program RFVWBEW1 (how to run the program is described in steps 1. to 3. under Procedure ).

If normal spot rate valuation is used before the local currency changeover, the differences between the book exchange rate and the fixed rate only need to be offset by corresponding flows if the book exchange rate lies above the fixed rate. In this case, you write down the currency.
If the book exchange rate lies below the fixed rate, you may not be permitted to write up the currency. In this case, the difference would remain as a hidden currency reserve.

 For more information about the relevant Customizing settings, see Customizing Settings (TR-TM-SE), under Disclosing Currency Reserves: Customizing Settings.

Procedure

1. After you have carried out the normal key date valuation (report program RFVWBEW0), go to the Securities application menu and choose Back office ® Position Management ® EMU additional functions ® Foreign exchange write-up (report: RFVWBEW1).

2. Under the selection parameters for the program, choose the two-step valuation principle EU which only permits forex write-ups/write-downs and does not permit security write-ups/write downs.

The positions are valued according to this principle rather than according to the settings made in the master data.

The valuation principle EU is included in the Customizing settings delivered with the system.