Currency Translation (SAP Library - FI Accounts Receivable and Accounts Payable)

Currency Translation

Use

You can translate your account balances from local currency into group currency. The translation is carried out in accordance with FASB 52 (US GAAP).

Integration

In General Ledger Accounting, you can only carry out a currency translation as part of the foreign currency valuation.

Prerequisites

In order to carry out a currency translation, you have to make certain settings in addition to the settings for the foreign currency valuation. You make the settings in Customizing under Financial Accounting → General Ledger Accounting/Accounts Receivable and Accounts Payable → Business Transactions → Closing → Valuating → Foreign Currency Valuation.

You must define a valuation area. Choose Define valuation areas.

You must also define the expense and revenue accounts for exchange rate differences from valuations for this valuation area. For payables and receivables accounts you must also define the financial statements adjustment accounts. To do this, choose Automatic postings for foreign currency valuations.

Features

You carry out the currency translation as part of your foreign currency valuation:

Foreign Currency Valuation

The foreign currency balance sheet accounts and the open items in foreign currency are valuated, and the exchange rate differences are posted to the expense and revenue accounts for exchange rate differences in local currency. In addition, the exchange rate differences determined in local currency are translated into group currency and posted to the valuation area.

As part of the valuation of open items in foreign currency, the exchange rate difference in group currency is saved in the valuation area per item.

Currency Translation

The account balances are translated from local currency into group currency.

Activities

You can use the FASB 52 tab to carry out the currency translation.

Caution

The procedure described here assumes the simple case where you want to translate from local currency (currency type 10) into the group currency (currency type 30). You can however also carry out the foreign currency valuation and currency translation for other currency types.

Foreign Currency Valuation

Ensure that currency type 10 (local currency) is specified in the general selection data.

On the Postings tab, select the indicator Valuation for FS preparations. The exchange rate differences are then saved per document.

On the FASB 52 tab, enter the data required for the valuation.

Select the indicator Translate valuation differences. All the amounts determined by the valuation are then translated into the group currency and saved.

Specify the exchange rate type for translating the valuation differences determined, for example, bank selling rate, buying rate, or average rate.

Specify the valuation area in which the valuation differences determined are saved in group currency.

Choose Execute. The valuation is then carried out for the local currency and the valuation differences determined are translated into the group currency.

Currency Translation

Call up the foreign currency valuation again and enter currency type 30 (group currency) in the general selection data.

On the FASB 52 tab, enter the data required for the currency translation.

Select the indicator Execute translation. All account balances are translated from local currency into group currency.

Specify currency type 10 for your local currency or your valuation area of the local currency.

Choose Execute to translate the account balances from local currency into group currency.