2020-04-14 2882025

2882025 - Multiple valuation approaches/transfer prices

in SAP S/4HANA, on-premise edition
Version 7 Type SAP Note
Language English Master Language German
Priority Recommendations / Additional Info Category FAQ
Release Status Released for Customer Released On 08.04.2020
Component EC-PCA-TP ( Transfer Prices )

Please find the original document at https://launchpad.support.sap.com/#/notes/ 2882025

Symptom

You need information about the activation and use of multiple valuation approaches in SAP S/4HANA, on-
premise edition.

This SAP Note deals with the following valuation approaches:

• Profit center valuation (transfer prices)

• Group valuation

Information about the activation of parallel cost of goods manufactured (COGM) is not part of this SAP Note.

Other Terms

Profit center valuation, transfer prices, group valuation, profit center, PCA, SAP S/4HANA Finance,
ACDOCA, 8KEM, 8KEQ

Reason and Prerequisites

You want to activate multiple valuation approaches/transfer prices in SAP S/4HANA, on-premise edition.

Solution

This SAP Note provides information about the use of profit center valuation (transfer prices) and/or group
valuation in an SAP S/4HANA system. The subsequent implementation of multiple valuation
approaches in a productive SAP S/4HANA system is not yet supported. Therefore, if multiple valuation
approaches are required in your group, the current recommendation is to introduce the multiple valuations in
the ERP system and then migrate to SAP S/4HANA.

Multiple valuations are highly integrated with various SAP applications. Therefore, you should consider the
following before activation:

• In a test system, carefully analyze whether and which multiple valuation approaches you need before
using them in a productive system.
! A deactivation of multiple valuation approaches/transfer prices in SAP S/4HANA is currently
impossible. !
• A maximum of three currency fields are available for the operational inventory valuation of the
materials. Before you implement the profit center valuation or group valuation, you must therefore first
check which currencies are required for the legal requirements in the inventory valuation.
• Multiple valuations in the sense of transfer prices are not supported in RAR (FI-RA). The corresponding

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currencies must be deactivated in customizing for RAR. Deactivation is possible as of RAR Release
1.3 SP 3.
• SAP Retail: Customers with SAP Retail could not use the material ledger and therefore the transfer
price functions in ERP because they had their own material masters. In SAP S/4HANA, the material
ledger is always active for inventory valuation, that is, also for SAP Retail customers. However, SAP
Retail customers may experience functional restrictions when they use transfer prices because, for
example, for structured articles (such as 1 pallet with various articles), the splitting of the individual
materials is technically implemented using the external value (field EXWRT). The field EXWRT is also
used for the technical determination of the transfer price. It is therefore impossible to use both functions
at the same time. The optional actual costing can currently be used for all valuation views only with
restrictions. This will gradually change.

Definition of terms
Currency: for example, company code currency (technical type 10)
Valuation: legal valuation (0), profit center valuation (2), group valuation (1)
Multiple valuation approach: Profit center valuation or group valuation
Currency type (CT): A combination of currencies and valuation or valuation view; for example, 32 is the group
currency in profit center valuation.

For more detailed information about the settings, see the following explanations.

Currency and valuation profile

In the currency and valuation profile (C&V profile), you determine which valuation approaches are managed
in which currencies throughout the SAP system. The legal valuation approach must be managed in company
code currency (currency type 10) and is fixed. You can decide whether the profit center valuation approach
and the group valuation approach are managed in the company code currency or in the group currency
(currency type 30).
To ensure a consistent update of the data, it is absolutely essential that you use currency type 30 or currency
type 10 as the controlling area currency in cases where there is an N:1 relationship between the company
code and the controlling area. However, SAP Note 876502 enables you to maintain the multiple valuation
with currency type 10 for a controlling area currency with currency type 30 in the C&V profile. This is of
interest if your management requires the multiple valuation approaches in company code currency.

Once you have defined the C&V profile, you must assign it to a controlling area.
Customizing -> "SAP Reference IMG -> Controlling -> General Controlling -> Multiple Valuation
Approaches/Transfer Prices -> Basic Settings -> Maintain Currency and Valuation Profile" and "-> Assign
Currency and Valuation Profile to Controlling Area".

If you include the profit center valuation in the C&V profile, you must use it in the universal journal or in
classic Profit Center Accounting. Otherwise, the maintenance in the C&V profile makes no sense.

Currency settings in the universal journal

In the universal journal, multiple valuation approaches are managed in the same way as parallel FI
currencies. You maintain the customizing for the currency settings in transaction FINSC_LEDGER. You can
see the setting options for the multiple valuation approaches in transaction FINSC_LEDGER only if a C&V
profile is assigned to at least one controlling area.

You can either

- update the multiple valuation approaches in addition to the legal valuation approaches in the leading ledger
or a non-leading ledger (mixed ledger, multiple valuation ledger)
- or create a separate valuation ledger for the multiple valuation approach (single valuation ledger).

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Mixed ledger (multi-valuation ledger)

If you use multiple valuation approaches in addition to the legal valuation approaches in a common ledger,
this reduces the storage requirement as well as the time and effort involved in closing operations. In this
case, no valuation view is assigned to the ledger in transaction FINSC_LEDGER.
The currency types (for example, 12/32 or 11/31) are maintained per ledger and company code. The point at
which the multiple valuation approaches are to be maintained depends on the SAP S/4HANA release. Up to
and including SAP S/4HANA Release 1709, the valuation approach that is managed in the material ledger
must be in one of the first four currency fields. Therefore, besides the two currencies set by the system (local
currency and company currency), only the first two freely defined currencies remain for a profit center
valuation or group valuation. All freely definable currencies can be used for operational inventory valuation
only as of SAP S/4HANA Release 1809.

The freely defined currencies that are additionally maintained per ledger and company code are always
translated from the delivered valuation approaches. Example: If, for example, the profit center valuation is
maintained in group currency (32) in the C&V profile, currency type 32 should be set as the 2nd FI currency
or 3rd FI currency (currency type of the 2nd or 3rd currency in FI (BSEG)) and currency type 12 should be set
as a freely defined currency.
We recommend that you maintain the currency views and valuation views maintained in the C&V profile as
the 2nd or 3rd FI local currency in transaction FINSC_LEDGER (scroll to the right on the screen). The
background is that currently only these FI currencies are integrated with all other applications. You also need
the integrated FI currency, for example, if you want to execute manual postings in FI in the multiple
valuations.

Separate valuation ledger (single-valuation ledger)

In this case, a valuation view is assigned to the ledger in customizing (transaction FINSC_LEDGER). As a
result, currency types 12/32 for profit center valuation and 11/31 for group valuation are automatically
displayed in "Company Code Settings for the Ledger" in the first two currency columns. Technically, these
are the fields HSL and KSL of the table ACDOCA. You can add other currency types, but only those with the
same valuation view. Otherwise, the system issues message FINS_ACDOC_CUST258.
A separate valuation ledger provides a transparent separation of postings and reporting in the multiple
valuation approach.

CAUTION: The separation of the multiple valuation views from the legal valuation in a single valuation ledger
is currently not completely possible due to a restriction in Asset Accounting. For more information, see SAP
Note 2554992.
Therefore, you must currently choose one of the following approaches:
- Leading ledger as a pure multi-valuation ledger
- A single valuation ledger for profit center valuation and/or group valuation. In this case, however, you must
currently also include the multiple valuation in the leading ledger. The leading ledger becomes the multi-
valuation ledger automatically.
- The leading ledger contains only the legal valuation. There are also other nonrepresentative ledgers as
multi-valuation ledgers that contain the currency types of profit center valuation or group valuation in addition
to legal valuation (in the currency fields ACDOCA-HSL and ACDOCA-KSL).
This SAP Note is updated when the current restriction changes.

Additional information about transaction FINSC_LEDGER

Customizing: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings ->
Ledgers -> Ledger -> Define Settings for Ledgers and Currency Types
(transaction FINSC_LEDGER)

Exchange rate type: Until now, there was a recommendation for the multiple valuation views to maintain the
exchange rate type M because amounts in multiple valuations in other SAP applications are always

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translated automatically using the exchange rate type M. If you have set an exchange rate type other than 'M'
in transaction FINSC_LEDGER, see SAP Note 2879066.

Source currency type: Refer to SAP Note 2581071 for more information about the use of the source currency
type in currency translation for currency types in profit center valuation or group valuation. If possible,
translation always takes place within a valuation.

A frequently asked question is why, when you activate profit center valuation, both currency types 12 and 32
need to be maintained in the new currency customizing (transaction FINSC_LEDGER) (similarly, when you
activate group valuation, both currency types 11 and 31).
Although only one currency type is maintained for a valuation approach in the currency and valuation profile,
both currency types of a valuation are necessary for updating data in Controlling. With the introduction of the
universal journal, the data model has been simplified and harmonized. The universal journal uses the ledger
approach for general ledger accounting and for all subledgers. Therefore, in ACDOCA, the currency types in
the company code currency and the 'global currency' (currency 2 in transaction FINSC_LEDGER =
controlling area currency) must exist for each valuation view.
If you used multiple valuation approaches in your ERP system, both currency types are automatically
transferred to the currency settings of the universal journal as part of the SAP S/4HANA migration.

Controlling
In ERP systems, the multiple valuation approaches were saved in different actual versions (delta versions) in
Controlling. In SAP S/4HANA, the universal journal integrates postings from Financial Accounting (FI) and
Controlling (CO). Accordingly, FI and CO use the same database table (ACDOCA) and must be
standardized. The universal journal uses the ledger approach for general ledger accounting and for all
subledgers.
However, some CO transactions still expect the data in the old CO version format. For reasons of
compatibility, it is therefore necessary in SAP S/4HANA both to maintain the versions for multiple valuations
and to assign the ledgers to these CO versions.

Customizing -> SAP Reference IMG -> Conversion of Accounting to SAP S/4HANA -> Preparations and
Migration of Customizing -> Preparations and Migration of Customizing for General Ledger -> Define Ledger
for CO Version
or
Customizing -> SAP Reference IMG -> Controlling -> General Controlling -> Manange Multiple Valuation
Approaches/Transfer Prices -> Basic Settings -> Define Ledger for CO Version

Using this activity, you assign general ledgers to controlling versions (CO versions). This means that
Controlling reads the actual data (postings) from the general ledgers you specify here.

CAUTION: We recommend that you always manage version "000" as a legal valuation, even if other settings
are still possible for compatibility reasons (for example, for migration customers). The background is that a
number of Controlling functions are available only in leading version "000".

Material ledger (operational inventory valuation) and actual costing

Multiple valuation approaches or transfer prices refer to different valuation approaches for material
movements and inventories and their sales. With regard to material price determination, a distinction must be
made between operative inventory valuation and actual costing.

For a multi-currency-capable and/or multi-valuation-capable inventory valuation, the material ledger is used.
This must be active in SAP S/4HANA. The operationally valuated inventory is managed in SAP S/4HANA in
the universal journal (table ACDOCA). The currency types in the material ledger are defined as before in
customizing in material ledger types, which in turn are assigned to the valuation areas (usually the same as
the plant). Profit center valuation and/or group valuation should be assigned to a material ledger type only in

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the currency maintained in the C&V profile. Currency types 11 and 31 or 12 and 32 cannot be processed
completely in parallel along the value chain (See also Note 2760935.).

Customizing -> SAP Reference IMG -> Controlling -> General Controlling -> Manage Multiple Valuation
Approaches/Transfer Prices -> Basic Settings -> Check Material Ledger Settings. Under "Assign Currency
Types and Define Material Ledger Types", you can create material ledger types and assign the desired
currency types. In SAP S/4HANA, only individual characteristics are possible, which is why the columns "CT
from FI" and "CO CrcyTyp" are grayed out.

In addition to inventory valuation at moving average price or standard price, you can also perform inventory
valuation at actual costs in the currency types for multiple valuation. For this, actual costing must be activated
for the valuation areas. The activation and use of actual costing is optional.

Asset Accounting
As of SAP S/4HANA 1.0, Asset Accounting (new) is available. This replaces classic Asset Accounting.

For each additional valuation approach in Asset Accounting, you must create a separate valuation area. The
valuation type is assigned a currency type, which defines the currency and the valuation. There must be a
separate depreciation area for each currency/value approach and for each ledger. For this reason, you may
have to create a new chart of depreciation for new company codes with new currency settings.

Customizing -> SAP Reference IMG -> Financial Accounting -> Asset Accounting -> General Valuation ->
Currencies -> Specify the Use of Parallel Currencies

In Asset Accounting, there is a restriction when you set a representative ledger in which transfer prices are
used. Asset Accounting permits only a representative ledger in which either only legal currency types (such
as 10, 30) or mixed currency types (for example, 10, 30, 31) are set. In contrast, the following scenario is not
allowed: The ledger is assigned to the company code as the representative ledger in Asset Accounting. A
valuation other than the legal valuation (CURTPH <> 10) is assigned to this ledger as the currency type of the
first currency (CURTPH). This means that you currently cannot use any single-valuation ledgers (message
ACC_AA274).

For detailed descriptions with examples of which scenarios are currently supported and which are not, see
SAP Note 2554992.

Classic Profit Center Accounting (PCA)

You can still use classic Profit Center Accounting in SAP S/4HANA. If you use classic Profit Center
Accounting, you define which valuation approach is to be used in customizing for classic Profit Center
Accounting at controlling area level.
Note that in classic Profit Center Accounting, only ONE valuation approach is managed. This means that if
the profit center valuation is active, the legal valuation approach in PCA is no longer available. The
currency field HSL then corresponds to currency type 12, and the currency field KSL corresponds to, for
example, currency type 32 (if classic PCA is managed in group currency). Usually, only one currency type is
originally filled with data (the valuation approach from the currency and valuation profile). The other currency
type is translated using the exchange rate type 'M' on the posting date. If you need to update the legal values
by profit center in parallel, you must map this using the universal journal. Also note that the update of the
transaction currency in classic Profit Center Accounting is impossible if transfer prices are activated.

Customizing -> SAP Reference IMG -> Enterprise Controlling -> Profit Center Accounting -> Basic Settings -
> Maintain Settings for the Controlling Area. (transaction 0KE5)

or Customizing -> SAP Reference IMG -> Enterprise Controlling -> Profit Center Accounting -> Basic Settings
-> Controlling Area Settings -> Activate Direct Postings -> Set Control Parameters for Actual Data

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Transfer pricing for MM movements

For the settlement with transfer prices, pricing must be set.

Customizing -> "SAP Reference IMG -> Financial Accounting -> General Ledger Accounting -> Business
Transactions -> Parallel Valuation Approaches/Transfer Prices -> Basic Settings for Pricing"
(and) "-> Advanced Settings for Pricing"

For actual postings, only the delivered transfer price variant "000" can be used. Maintain suitable pricing
procedures and conditions. Create condition records for the transfer price conditions.

In order to analyze the transfer pricing during the activation phase or to find incorrect settings, you can use
the condition analysis. You can activate this in customizing in the "Basic Settings for Pricing" at transfer price
variant level using the "Condition Analysis" indicator. This indicator activates client-wide analysis.
Alternatively, you can set the SET/GET parameter DIA to X in the user master record to control the activation
of the analysis for each user.

Account determination

Accounts for internal goods movements

When you use the profit center valuation view, the flow of goods between profit centers is mapped using
additional line items for internal revenues, internal costs, and inventory changes. You have to maintain the
account determination for these line items. For the profit centers to be displayed correctly, the G/L accounts
must not be created as cost elements. The profit center would be derived from the real account assignment
because a cost element requires a real account assignment object.

Customizing -> SAP Reference IMG -> Financial Accounting -> General Ledger Accounting -> Business
Transactions -> Parallel Valuation Approaches/Transfer Prices -> Settings for Internal Goods Movements ->
Define Account Determination for Internal Goods Movements

Account for production variances

When you use transfer prices for cross-plant production, a special account is required in order to settle
production variances to the sending profit center rather than to the receiving profit center.

Customizing -> SAP Reference IMG -> Financial Accounting -> General Ledger Accounting -> Business
Transactions -> Parallel Valuation Approaches/Transfer Prices -> Settings for Internal Goods Movements ->
Define Acct Determination for Prod. Variance for Delivery to Another PrCtr

Value approach clearing account

Receivables and payables are posted identically in all valuation views, that is, with the value of the legal
valuation view because payment is made in this amount. If the offsetting account (revenues, expenses, and
so on) contains a value that differs from that of the legal view in the profit center valuation and/or group
valuation, the system posts the difference to a valuation approach clearing account. Note that you must not
create the value approach clearing account as a cost element. Maintain the valuation approach in
Customizing -> SAP Reference IMG -> Controlling -> General Controlling -> Manage Multiple Valuation
Approaches/Transfer Prices -> Level of Detail -> Define Valuation Clearing Account.

SAP Note 2701813 - GLT2 201 for company code clearing lines and valuation approach clearing lines

Sales and Distribution - pricing for billing documents

Multiple valuation approaches can be used both for sales to external customers and for sales to affiliated

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companies. For this purpose, you must include the condition categories with the relevant control in the pricing
procedures. The following condition categories are provided for this:

Condition category 'b' for conditions used to determine group cost of goods manufactured. The value in group
valuation is automatically read from the material ledger. In the standard SAP system, condition category
KW00 is delivered for this purpose.

Condition category 'h' for conditions to determine the cost of goods manufactured from the profit center
valuation view. The value in profit center valuation is automatically read from the material ledger. In the
standard SAP system, condition category PCVP is delivered for this purpose.

Condition category 'c' for conditions to determine the price from the profit center valuation view. You need to
maintain condition records (prices) for this condition category. In the standard SAP system, condition
category PC00 is delivered for this purpose.

Condition category 'n' for conditions to determine the cost of sales from the profit center valuation view at the
time the customer billing document is created for third-party order processing.

Product Cost Planning

The multiple valuation approaches in the material ledger can either be maintained manually or determined
using product cost planning. Product Cost Planning offers the option of determining standard costs for each
valuation approach (legal, group, profit center) and updating these in the material ledger. To determine the
costs in the corresponding valuation views, you can create corresponding costing variants in customizing.
The costing variant is assigned a costing type that determines which valuation approach costing is calculated.
The costing type similarly determines whether the standard price of the corresponding valuation approach
can be updated by the costing variant. The standard prices in the various valuation views are updated using
the known logic (allow marking, mark, allow release, release).

Customizing -> SAP Reference IMG -> Controlling -> Product Cost Controlling -> Product Cost Planning ->
Material Cost Estimate with Quantity Structure -> Define Costing Variants
Customizing -> SAP Reference IMG -> Controlling -> Product Cost Controlling -> Product Cost Planning ->
Material Cost Estimate with Quantity Structure -> Costing Variant: Components -> Define Costing Types

When calculating the values for the profit center valuation view, pricing is to be taken into account for profit
center changes, in the same way as for the actual allocation. In Customizing under "Controlling -> Product
Cost Controlling -> Product Cost Planning -> Material Cost Estimate with Quantity Structure -> Define
Costing Variants", set the "Cost Beyond Profit Center Boundaries" indicator in the "Quantity structure" folder.
This indicator is displayed only if the costing type is set for profit center valuation.
The costing version controls which transfer price variant from Profit Center Accounting is to be used as part
of costing. Customizing -> SAP Reference IMG -> Controlling -> Product Cost Controlling -> Product Cost
Planning -> Selected Functions in Material Costing -> Define Costing Versions.

The group costing saves the valuation differences from the legal and profit center valuations in additional cost
components for the cost of goods manufactured. You must create these cost components for the cost of
goods manufactured in addition to the usual cost components. You must also identify them as such on the
detail screen for cost components for the cost of goods manufactured using the "Delta Company Code" or
"Delta Profit Center" field. Customizing -> SAP Reference IMG -> Controlling -> Product Cost Controlling ->
Product Cost Planning -> Basic Settings for Material Costing -> Define Cost Component Structure.

In this step, you specify that the cost components of the material costing, sales order costing, or order BOM
costing are to be updated both in the currency of the company code, and in the currency of the controlling
area. This processing requires that the "All Currencies" indicator is set as the control indicator for the
controlling area. Customizing -> SAP Reference IMG -> Controlling -> Product Cost Controlling -> Product
Cost Planning -> Selected Functions in Material Costing -> Activate Cost Component Split in Controlling Area

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Currency.

Costing-based profitability analysis

By activating the profit center valuation, you can analyze both external sales and internal sales between profit
centers (such as transfers between two plants or material withdrawals) in Profitability Analysis for transfer
prices. When you activate the profit center valuation, line items with profit center valuation are created in
addition to the valuation approaches with legal valuation. As a result, the data volume roughly doubles during
the actual data update.

a) In customizing for maintaining the operating concern, you configure whether the profit center valuation is
managed as an additional valuation approach in CO-PA. When you generate the operating concern, the
required data structures are then created for this. Customizing -> SAP Reference IMG -> Controlling ->
Profitability Analysis -> Structures -> Define Operating Concern -> Maintain Operating Concern

b) The group valuation approach is managed in the data structures of the legal valuation in additional value
fields. To control the costs and revenues in the different views separately, you must create additional value
fields and assign them to the data structures. The field contents must be filled using the CO-PA user exit
because an entry using value field assignment is impossible. The profit center valuation is updated in a
separate ledger. No separate value fields are required.

c) Assign the value fields of the profitability analysis to the accounts for internal goods movements between
profit centers (from transaction 0KEK). The quantities of the internal goods movements can similarly be
transferred into the corresponding quantity fields. Customizing -> SAP Reference IMG -> Controlling ->
Profitability Analysis-> Flows of Actual Values -> Multiple Valuation Approaches/Transfer Prices -> Assign
Accounts for Internal Goods Movements

d) Assign the SD conditions to the corresponding value fields in Profitability Analysis. Customizing -> SAP
Reference IMG -> Controlling -> Profitability Analysis -> Flows of Actual Values -> Transfer of Billing
Documents

e) The profit center valuation in Profitability Analysis must be activated for each controlling area. Customizing
-> SAP Reference IMG -> Controlling -> Profitability Analysis -> Flows of Actual Values -> Multiple Valuation
Approaches/Transfer Prices -> Activate Profit Center Valuation

Activate transfer prices

The activation of the C&V profile for a controlling area is the final step in customizing for multiple valuation
approaches/transfer prices. Activate the C&V profile only after you have made all the settings described
above. Use the check function before activating.

Customizing -> SAP Reference IMG -> Controlling -> General Controlling -> Manage Multiple Valuation
Approaches/Transfer Prices -> Activation -> Multiple Valuation Approaches: Check/Execute Activation

Other Components

Component Description

FI-GL General Ledger Accounting

EC-PCA-ACT Actual Data

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