Outlining Foreign Currency Valuation

Objectives

After completing this lesson, you will be able to:

  • Use the Schedule General Ledger Jobs app to execute a foreign currency valuation of customer open items.

Foreign Currency Valuation Run

Introduction

When a transaction is made in a foreign currency on a customer account, it is converted to the company code currency using the exchange rate on the posting date.

Since this exchange rate may differ at the end of the period, the open items must be revaluated based on specific business and legal standards.

Business Scenario

Carla will support the foreign currency valuation in accounts payable in the subsequent period-end closing.

To prepare for this new task, she first familiarizes herself with the basic terms:

  • Valuation Method
  • Valuation Area
  • Posting Logic

Select the Play button to learn how to perform foreign currency valuation in SAP. Understand the valuation method, valuation area, and the generation of valuation postings. Watch now!

Carla's Summary:

To perform a foreign currency valuation, a valuation method must be configured in the SAP system. This determines the following:

  • Valuation Procedure
  • Exchange Rate Type
  • Document Type

The method is assigned to a valuation area. When scheduling a valuation job, assign a valuation area and key date.

The foreign currency valuation run generates the valuation posting on the key date, the valuation expense/revenue from the currency valuation, and the offsetting entry on an adjustment account. The posting cannot go directly to the receivable reconciliation account, so it goes to an adjustment account. The valuation area also controls ledger determination.

The posting is reversed the next day, but this can be changed in the job parameters.

Foreign Currency Valuation Demo

Carla's manager, Sandra, asked her to test foreign currency valuation using a testing environment. She double-checks the balance sheet, accesses the General Ledger Account, and accesses a USD 100 invoice.

Select the Play button to learn how to perform foreign currency valuation in SAP using the Fiori App Schedule General Ledger Jobs. This video provides step-by-step instructions on accessing the valuation template, scheduling the job, and reviewing the results.

Run a Foreign Currency Valuation

In this exercise, you prepare and execute a foreign currency valuation run. Afterward, you will analyze the balance sheet and income statement results.

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