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When you implement the Transaction Manager, you define the valuation principles and valuation classes according to which you want to perform valuation in the operative valuation area. You make these definitions in Customizing under General Settings. Choose Accounting -> Operative Valuation Area -> Define One-Step Valuation Principles, Define Two-Step Valuation Principles, or Define Valuation Classes.

  1. Valuation principles

    2. The valuation principles define the rules according to which you perform valuation. A valuation principle comprises the valuation method and the rules which define how to write up and write down the foreign currency and the security.

    The valuation methods are as follows:

    1. One-step valuation method
    2. Two-step valuation method
      1. Two-step method (first security, then foreign currency)
      2. Two-step method (first foreign currency, then security)

    When you have chosen the valuation method, you define the rules you want to use to determine the new book value when comparing the last book value, the key date value and the acquisition value. You then write it up/down accordingly.

    When you use the one-step method, you define how to perform write-ups/write-downs to the total amount in local currency.

    When you use the two-step methods, there is a difference between the write-up/write-down amount for the security price and for the exchange rate.

    The graphic below provides an overview of the valuation principle and shows you which write-up/write-down rules you can define.

    Overview: Valuation principle

    This graphic is explained in the accompanying text

  2. Valuation class

    A valuation category and a valuation principle are combined in the valuation class. The valuation category determines the position management type and thus how the valuation groups are put together. The valuation principle contains the method and the rules according to which you perform valuation for a valuation group.

    The valuation class includes all the     Position management and valuation information. The only other decision you have to make elsewhere is whether or not to flag the portfolio indicator.

    Overview: Valuation class
    This graphic is explained in the accompanying text


Use of the valuation classes in the securities area

You must assign a valuation class at company code and securities account level to each position in the position indicator.

See also: Position indicator

Read the section Define Valuation Classes in the Implementation Guide (IMG).

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