SAP FI

In order to create your

financial statements, you
have to carry out a foreign
currency valuation. This
valuation covers the
following accounts and Customizing
items:

- Foreign currency balance

sheet accounts, that is, the Foreign Currencies
G/L accounts that you run in
foreign currency.
The balances of the G/L
accounts in foreign currency
are valuated.

Valuation
- Open items posted in foreign
&
currency.
The line items in foreign
currency are valuated.
Exchange Rates
 Purpose:

This wiki provides a demonstration of valuation of Open Items In Foreign Currencies

Overview

From the help.sap.com documentation the following is stated Valuation of Open Items in Foreign
Currencies.

Use

All open items in foreign currency are valuated as part of the foreign currency valuation:

 The individual open items of an account in foreign currency form the basis of the valuation, that is,
every open item of an account in foreign currency is valuated individually..
 The total difference from all the open items in an account is posted to a financial statement
adjustment account. The account therefore retains its original balance.
 The exchange rate profit or loss from the valuation is posted to a separate expense or revenue
account for exchange rate differences as an offsetting posting.
 A valuation cannot be made by posting to the payables/receivables account, since reconciliation
accounts cannot be directly posted to.
For this reason the amount is posted to an adjustment account, which appears in the same line of
the balance sheet as the reconciliation account

Prerequisites

To carry out a foreign currency valuation, you must first make certain settings in Customizing. 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 the exchange rates.

 You must also define a valuation method. Choose Define valuation methods.
 You must also define the expense and revenue accounts for exchange rate differences from
valuations. For payables and receivables accounts you must also define the financial
statements adjustment accounts. To do this, choose Automatic postings for foreign currency
valuations.
 If you want to carry out a parallel valuation, you must also have defined a valuation area.
Choose Define valuation areas.
The exchange rate differences from the parallel valuation are posted in this valuation area. If you
carry out a parallel valuation with a different valuation method to the first valuation, you
do not have to reverse the postings from the first valuation. This information is then available for
subsequent closing operations, for example, Transferring and Sorting Receivables and Payables
 Steps1: Define Local Currencies
Implementation Guide: Financial Accounting (New) -> Financial Accounting Global Settings (New) ->
Ledgers -> Ledger -> Define Currencies of Leading ledger (Transaction code OB22)

OB22: The currency type 30 is defined as source currency = 2(Translation taking first local currency as
basis),

- Otherwise the currency type 30 is not posted in the first step with the FAGL_FC_VALUATION (Re-
measurement)

Step 2 - General customizing

Local currency of company EUR -

Implementation Guide: Financial accounting (New) -> Financial accounting global settings (New) -> global
Parameters for company code - Transaction code OBY6
Step 3 – Define Exchange Rate
Implementation Guide: SAP NetWeaver -> General settings -> Currencies (check all settings) -> Enter Exchange
rates (Transaction code OB08)

Step 4 - Review of Foreign Currency Valuation customizing

Prior to performing a foreign currency valuation review of customizing:
Implementation Guide: Financial Accounting (New) -> General Ledger Accounting (New) -> Periodic Processing ->
Valuate
Step 5 - Define Valuation Methods

SAP uses exchange rate type M to value all foreign currency items. M is the average rate of any foreign currency.

In this step, you define your valuation methods for the open items. With the valuation method, you group
specifications together, which you need for the balance and individual valuation. Before every valuation run, you
specify the required valuation method.

SAP provides various valuation methods. You can create your own key starting with Z.
1- Valuation Methods:

A- Lowest Value Principle:

The valuation is only displayed if the valuation difference between the local currency amount and
the valued amount is negative that ¡s an exchange loss has taken place. The valuation is carried
out per item total.

B- Strict Lowest Value Principle:

The valuation is only displayed if, as a consequence, the new valuation has a greater devaluation
and/or a greater revaluation for credit entries than the previous valuation. The valuation ¡s
calculated per item total.

C- Always valuate:
If you select this procedure, revaluations are also taken into consideration.

D- Revalue Only
If you select this method system only does a revaluation if applicable but does not do devaluation
where there is exchange loss.

E- Reset:
If you select this parameter then the open items are valuated at the acquisition price. This way the
valuation difference is set to zero. The old valuation method is reset. The account determination is
reversed: The revenue that arises is posted to the expense account.

2- Exchange rates are types are attached to the valuation method:

A- Determine rate type from account balance:

- Relevant for foreign currency bank account revaluation

- If you select this field, the account balance/group balance in the relevant foreign
currency is used to determine the exchange rate type. This is relevant for account
balance revaluation.

B- Exch.rate type from invoice reference:

- Relevant for open items
Step 6: Customizing for Foreign currency valuation area
Step 7: Define Account Determination for Currency Translation
Step 8: Define Accounting Principles
Step 9: Assign Accounting Principles To Ledger Group

Check Assignment of Accounting princples to ledger Group

 Required if you have more than one ledger

Step 9: Prepare Automatic Postings for Foreign Currency Valuation

(Transaction code OBA1) (OBA1)

The Target Accounts for KDB/KDF can also be defined per valuation area

- Select Transaction KDF, enter Chart of Accounts

- Select Transaction KDB, Exch. Rate Diff. using Exch. Rate Key