Key Date Valuation 

Use

• Before you can perform valuation, you first have to perform period-end closing to close the period before valuation for flows that affect the position.
• You are also required to maintain valuation prices/rates.

• When you implement Treasury Management, you define the valuation principles and the valuation classes according to which you want to perform valuation in Customizing for basic functions.
• You assign a valuation class to each position in the position indicator. To do this, you can define default values for the company code and for the individual product types in Customizing for securities. The system uses these values when it determines the position indicator automatically (when you purchase a class for the first time).
• When you create a position indicator manually, before you purchase the class for the first time in the company code, you can override these default values from the settings at company code and product type level at class level.
  Exception: This is not possible for valuation at portfolio level.

1. When you perform key date valuation, the system compares the acquisition value, the book value and the key date value and calculates the new book value. To perform key date valuation, you can use the following two functions:
1. Amortization

When you perform amortization on a key date, the system compares the acquisition value including the capitalized costs and the previous amortizations (= book value) with the theoretical value of the security on the key date (net present value). It writes amortization flows for the difference amount.

You can calculate the net present value according to the Linear Amortized Costs (LAC) method or the Scientific Amortized Costs (SAC) method.

2. Rate/price valuation

When you perform rate/price valuation, the system compares the acquisition value including the capitalized costs and the previous write-ups/write-downs (= book value) with the market value of the security on the key date. It then calculates the new book value according to the write-up/write-down rules defined in the valuation principle.

1. You can use either the one-step or two-step methods to perform valuation.
   
   When you use the one-step method, you value your positions according to the total amount in local currency. Valuation takes place in two steps when you use the two-step method. You can either first value the flow in the security and then in the foreign currency, or vice versa.
2. Valuation category 22:
   
   The valuation category enables you to manage your positions for specific securities accounts (according to valuation category 21) when you perform valuation for all securities accounts. In other words, the securities account positions are only grouped together to form valuation groups for the key date valuation.
3. If you have decided to manage the capitalized costs separately, you can specify whether you want the capitalized charges and their write-down
   
   a) to be displayed separately or including the book/acquisition values
   b) to be partially or fully written down.
4. The following flows can be generated as a result of the rate/price valuation:
   
   - Write-ups/write-downs in the security
   - Write-ups/write-downs in the foreign currency
   - Write-downs in costs
   - Write-downs in foreign currency costs
2. You can carry out a test run at any time. The test run simply generates a valuation list. No postings are made. The posting log is empty.
3. There is a reversal function both for the amortization and for the rate/price valuation functions.

Position Management

Valuation Principles and Valuation Classes

Amortization

Amortization According to LAC and SAC

Position Indicator

Rate/Price Valuation

Reversing the Rate/Price Valuation