To create your financial statements, you have to perform foreign currency valuation. Foreign currency valuation covers the following accounts and items:
- Foreign currency balance sheet accounts, that is, the G/L accounts that you manage in foreign currency.
The balances of the G/L accounts that are not managed on an open item basis are valuated in foreign currency.
- Open items that were posted in foreign currency.
Open items that are open on the key date are valuated in foreign currency.
In foreign currency valuation, you have the following options:
- You can perform the valuation in local currency (that is, company code currency) or a parallel currency (for example, group currency).
- You can also use different valuation methods (for example, lowest value principle).
You have made the following settings in Customizing:
- You have defined exchange rates.
For more information, see Exchange Rates.
You have made these settings in Customizing for New General Ledger Accounting in the following activities: Financial Accounting (New) General Ledger Accounting (New) Periodic Processing Valuate.
- Define Valuation Methods
You have defined a valuation method here.
- Define Valuation Areas
Here, you have defined a valuation area and assigned a valuation method to it.
- Assign Valuation Areas and Accounting Principles
You have assigned to the valuation area an accounting principle that is also assigned to a ledger group.
The exchange rate differences from the parallel valuation are posted in this valuation area. If you perform parallel valuation with a different valuation method to the first valuation, you do not have to reverse the postings of the first valuation. This information is then available for subsequent closing operations, for example Transferring and Sorting Receivables and Payables
- Foreign Currency Valuation Prepare Automatic Postings for Foreign Currency Valuation.
Here, you have defined the expense and revenue accounts for exchange rate differences from valuations. For payables and receivables accounts, you additionally need to have defined the financial statements adjustment accounts.
Foreign currency valuation comprises the following functions:
- Valuating Foreign Currency Balance Sheet Accounts
- Valuation of Open Items in Foreign Currencies
- Saving the exchange rate differences determined from the valuation per document
- Posting account assignments in valuation documents: