Foreign Currency Valuation 

Use

To create your financial statements, you have to perform foreign currency valuation. Foreign currency valuation covers the following accounts and items:

●      Foreign currency balance sheet accounts, that is, the G/L accounts that you manage in foreign currency.

The balances of the G/L accounts that are not managed on an open item basis are valuated in foreign currency.

●      Open items that were posted in foreign currency.

Open items that are open on the key date are valuated in foreign currency.

In foreign currency valuation, you have the following options:

●      You can perform the valuation in local currency (that is, company code currency) or a parallel currency (for example, group currency).

●      You can also use different valuation methods (for example, lowest value principle).

●      If you translate additional currencies from the local currency, foreign currency valuation automatically performs a currency translation in accordance with FASB 52 (US GAAP).

You can only perform a valuation run once for each valuation area for a specific key date.

Prerequisites

You have made the following settings in Customizing:

●      You have defined exchange rates.

For more information, see Exchange Rates.

You have made the settings in Customizing for new General Ledger Accounting under Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Valuate →  

●      Define Valuation Methods

You have defined a valuation method here.

●      Define Valuation Areas

Here, you have defined a valuation area and assigned a valuation method to it.

●      Assign Accounting Principle to Valuation Area

If you are using parallel ledgers, you have assigned to the valuation area an accounting principle that is also assigned to a ledger group.

The exchange rate differences from the parallel valuation are posted in this valuation area. If you perform parallel valuation with a different valuation method to the first valuation, you do not have to reverse the postings of the first valuation. This information is then available for subsequent closing operations, for example Transferring and Sorting Receivables and Payables

●      Foreign Currency Valuation → Prepare Automatic Postings for Foreign Currency Valuation

Here, you have defined the expense and revenue accounts for exchange rate differences from valuations. For payables and receivables accounts, you additionally need to have defined the financial statements adjustment accounts.

Features

Foreign currency valuation comprises the following functions:

●      Valuating Foreign Currency Balance Sheet Accounts 

●      Valuation of Open Items in Foreign Currencies 

●      Saving the exchange rate differences determined from the valuation per document

●      Posting account assignments in valuation documents:

○       If you use document splitting, the valuation documents are posted with the account assignments that you have defined in Customizing as document splitting characteristics.

○       For balance valuation, you can define additional account assignment characteristics. These characteristics are always updated (even if you do not use document splitting). You define the additional account assignment characteristics in Customizing for foreign currency valuation under Define Additional Account Assignments for Balance Valuation. For more information, refer to the documentation on this IMG activity.

●      Performing the required adjustment postings

The following topics describe how you perform foreign currency valuation using a program and how you post valuation differences. You can also make these postings manually. From the SAP Easy Access screen, choose Accounting → Financial Accounting → General Ledger → Document Entry → Valuate Foreign Currency.

Activities

You can use either program FAGL_FC_VALUATION or program FAGL_FCV for foreign currency valuation. Not only does program FAGL_FCV comprise all of the functions offered by program FAGL_FC_VALUATION, it also offers additional functions.

●      To use program FAGL_FC_VALUATION, go to the SAP Easy Access screen and choose Accounting → Financial Accounting → General Ledger or Accounts Receivable/Accounts Payable → Periodic Processing → Closing → Valuate → Foreign Currency Valuation (New).

●      To use program FAGL_FCV for the first time, you execute it directly (transaction FAGL_FCV). Once you have performed the program in an update run in a given client, the system automatically launches program FAGL_FCV the next time that program FAGL_FC_VALUATION is called.

It is not possible to use both programs concurrently in the same client.

For more information on the individual functions and on using the programs, see the program documentation.