Foreign currency valuation

Foreign currency valuation is done for ascertaining the gain or loss occurred in an account balance/account payment due to fluctuations in foriegn exchange rate. Account balances and open items posted in foriegn currencies are required to be valuated at a particular date before preparing the financial statements to present a fair picture of the transactions.

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

The following describe how to carry out foreign currency valuation using the reports, and how to post valuation differences.

You can also make this posting manually. From the SAP Easy Access screen, choose Accounting > Financial accounting > General ledger > Document entry > Valuate foreign currency.

To carry out a foreign currency valuation, from the SAP Easy Access screen, choose Accounting > Financial accounting > General ledger/Accounts receivable/Accounts payable > Periodic processing > Closing > Valuate > Foreign currency valuation.