Valuing Foreign Currency Loans (SAP Library - Loans Management (FS-CML))

Valuing Foreign Currency Loans

Use

You use this function to value the remaining capital of loan positions for which the contract capital differs from the local currency. You can run the valuation for both loans given and loans taken.

For further information, refer to Operative Valuation Area.

Prerequisites

In the IMG activity Define Flow Types, define the flow types for the valuation, such as the write up and write down, exchange rate gain, exchange rate loss, and the translation and reset procedures for the valuation.

Assign the corresponding flow categories to the flow types you have defined under Assign Flow Types to Flow Categories.

In the IMG activity Define Account Determination, you need to define how the accounts for the respective flow type are determined.

In Customizing for Corporate Finance Management (CFM), define the required valuation principles under Define Single Level Valuation Principles.

Procedure

Choose Accounting® Closing Operations® Operative Valuation Area ® Valuation of Foreign Currency Loans.

The Balance Sheet Valuation of Foreign Currency Loans screen appears.

In addition to the company code and contract number(s) you can enter the following selection parameters for the valuation:

Product type

Loan type

Contract currency

Account assignment reference

Entered by

In the section headed Parameters for foreign currency valuation you must enter the key date for the valuation of the selected loans. The system defaults to the current date, but you can overwrite it.

Enter the following control parameters:

Valuation principle

Enter the valuation principle to be used (for example, lowest value principle).

Note

If you are valuing foreign currency loans as part of the contract currency changeover to the euro, you must use a valuation principle that takes the full valuation gains and losses into account (Valuation loss field: Valuation loss up to key date value, Valuation gain field: Valuation gain up to key date value).

Rate calculation

Enter the rate calculation indicator, which determines the rate type to be used for foreign currency translation (for example, standard translation using the middle rate).

Simulation/Test

The Simulation/test indicator gives you the following options:

If you leave the field blank, the system performs the standard valuation run (including postings to FI).
If you enter the value S, the system simulates the valuation (no postings are made). You would only use this list for evaluation purposes.
If you enter the value T, the system also performs a test run (no postings are made). In this case, however, the system also outputs a (test) posting log.

Reset valuation

If you set the Reset valuation indicator, the valuation that is performed for the selected loans on the specified key date is reset on the following day by means of a second posting. You use this procedure when you generate internal interim balance sheets during the fiscal year. As a result of the reset posting, the original book value at the start of year is restored as a basis for the balance sheet at the end of the fiscal year.

If this indicator is not set, a valuation run is carried out for all the selected loans for the specified key date. In this case, you can only reset the valuation using the reversal function.

If the indicator Take off euro rounding difference is set, the system does not execute a conventional foreign currency valuation. On the specified key date, the system simply calculates the following rounding differences in local currency euro for the loans selected and takes them off the books:

Rounding differences resulting from a local currency changeover to the euro. (Contract currency must be euro or the remaining debt in contract currency must be zero). Since the local currency amounts are translated as part of the local currency changeover, rounding differences can occur in the local currency balance (remaining debt in local currency).
Rounding differences resulting from a contract currency changeover to the euro (local currency must be euro). Since only adjustment flows for the contract currency are created during the contract currency changeover but the local currency side remains unchanged, rounding differences can occur in the local currency balance (remaining debt in local currency).

Note

Rounding differences in loans with a contract currency that is not the euro (foreign currency loans) and that have not been completely repaid (remaining debt in contract currency is not zero). These rounding differences are included in the automatic exchange rate gain calculation.
The system also includes rounding differences from loans with a local currency that is not the euro in the automatic exchange rate gain calculation.

Moreover, you can post the rounding differences to accounts, other than the income statement accounts used for foreign currency valuation. This may be necessary, for example in cases where the rounding differences affect previous years and are not to be included in the current profit and loss statement. In order to do this you have to make the following Customizing settings:

In the IMG activity Define Flow Types you need to create new flow types for exchange rate gain and exchange rate loss, to which you then assign flow category XD.
Under Assign Flow Types to Flow Category, you then have to assign the flow category XD_E to these flow types for the relevant condition group.

Note

If you have set the indicator Take off euro rounding differences, the system uses the flow types with flow category XD_E. If the system cannot find an entry for flow category XD_E, the entry is determined with flow category XD and the flow types for the original foreign currency are used to clear the rounding differences.

After you have created the required account in Financial Accounting you need to define the account determination the for the individual flow types in the IMG activity Define Account Determination.

You have three options for running the valuation:

Choose Program ® Execute. The system performs the valuation online.

If you choose Program ® Execute and Print, the system carries out the valuation and prints the valuation list in one step. You can also print the valuation list out separately after running the evaluation.

Choose Program ® Execute in Background. The system carries out the valuation in the background.

Result

The system displays the valuation list and, where applicable, the posting log.

The valuation list (Balance Sheet Valuation of Foreign Currency Loans) for the specified key date contains the following information:

The first line for each loan valued contains the company code, loan number and product type. The following data is displayed for each loan:

Currency

Contract currency

Remaining capital

Balance of all flows that affect the loan position (such as disbursements, repayments, and valuations) in contract currency.

Valuation gain/loss

The write-up/write-down amount in local currency calculated by the valuation that represents an unrealized gain or loss (difference between the old book value and the current value).

Acquisition value

Disbursement amount in local currency

Note

If there are several disbursements, the acquisition value is the total of the disbursement amounts in local currency.

Acquisition rate

Exchange rate for the disbursement

Note

If there are several disbursements, the acquisition exchange rate is a computed rate between the total foreign currency amounts for the disbursements and the corresponding local currency amounts.

Current value

Remaining capital in local currency at the current exchange rate

Current exchange rate

The exchange rate applicable on the key date. The system takes this rate from the general rate tables in Customizing (General Settings ® Currencies).

Old/new book value

Remaining capital in local currency before and after the valuation run

Old/new book exchange rate

Computed rate between the book value in foreign currency and the book value in local currency after the valuation run.

Special cover

Result of the valuation in local currency

The system displays the total valuation gain and the total valuation loss for all the loans selected in local currency. For each company code and product type, you see the totals for each loan currency. In addition, you see the total valuation gain and the total valuation loss in local currency for each company code and product type.

Note

Due to the time lapse between the debit position posting and the incoming payment, there may be exchange rate gains and losses that result from fluctuations in the exchange rate during this period. The system only clears the exchange rate difference automatically in Financial Accounting. It is not cleared in the Loans component.