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    Month End Closing-Foreign CurrencyRevaluation.

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    Kancheti Bhanu Prasad
    Foreign currency transactions must be revalued at month end using the current exchange rate to generate accurate financial statements. During revaluation, open items and balances in foreign currencies are converted to the local currency. This process may result in unrealized gains or losses that are posted to adjustment accounts. To perform revaluation in SAP, you use transaction code F.05 and specify parameters like the company code, evaluation date, and valuation method. This runs report SAPF100 to evaluate open items and foreign currency accounts.

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    Month End Closing-Foreign CurrencyRevaluation.

    Uploaded by

    Kancheti Bhanu Prasad
    260 views5 pages
    Foreign currency transactions must be revalued at month end using the current exchange rate to generate accurate financial statements. During revaluation, open items and balances in foreign currencies are converted to the local currency. This process may result in unrealized gains or losses that are posted to adjustment accounts. To perform revaluation in SAP, you use transaction code F.05 and specify parameters like the company code, evaluation date, and valuation method. This runs report SAPF100 to evaluate open items and foreign currency accounts.

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    Foreign currency transactions must be revalued at month end using the current exchange rate to generate accurate financial statements. During revaluation, open items and balances in foreign currencies are converted to the local currency. This process may result in unrealized gains or losses that are posted to adjustment accounts. To perform revaluation in SAP, you use transaction code F.05 and specify parameters like the company code, evaluation date, and valuation method. This runs report SAPF100 to evaluate open items and foreign currency accounts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    260 views5 pages

    Month End Closing-Foreign CurrencyRevaluation.

    Uploaded by

    Kancheti Bhanu Prasad
    Foreign currency transactions must be revalued at month end using the current exchange rate to generate accurate financial statements. During revaluation, open items and balances in foreign currencies are converted to the local currency. This process may result in unrealized gains or losses that are posted to adjustment accounts. To perform revaluation in SAP, you use transaction code F.05 and specify parameters like the company code, evaluation date, and valuation method. This runs report SAPF100 to evaluate open items and foreign currency accounts.

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    © All Rights Reserved
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    At a glance
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    The key takeaways are that foreign currency valuation needs to be performed at month-end closing to account for exchange rate fluctuations and correctly reflect revenues and expenses in the financial statements. It involves converting open items and account balances in foreign currencies to the local company code currency using current exchange rates.

    Foreign currency valuation is required for non-open item managed balance sheet account balances where the account currency is not the local currency, and for open items including vendor and customer items posted in a foreign currency.

    The steps are to enter transaction code F.05, select the company code, evaluation key date, valuation method and currency type, and press execute. It then generates a list of accounts selected for valuation, including open items in foreign currency and foreign currency balance sheet accounts.

    Foreign Currency Revaluation in SAP: Month End Closing

    Before creating Financial Statements, we have to perform Foreign


    Currency Valuation for the Transaction done in Foreign Currency.

    These transactions can be bills receivables or bills payable or might


    be intercompany money transfers which involves G/L Accounts,
    Customer or Vendor.

    The Line items can be open or cleared.

    For the Line items which are cleared the exchange rate would be
    that of the date on which it is cleared.

    For Open Items which are not yet cleared the exchange rate may
    be considered as the current rate or can be considered as month
    end exchange rate and can be carried out as a monthly closing
    activity.

    So at the year end, there could be some revenue or expense due


    to exchange rate fluctuations which will be reflected in the
    Financial Statements.

    Expense and Revenue Accounts for exchange Rate differences can


    be maintained in Customizing transaction code SPRO. In the SAP
    we can carry out Foreign Currency Revaluation in the following
    manner:
    Valuation is required for the following scenarios:

     Non-open item managed balance sheet account balances,


    where the account currency is not the local currency
     Open items, including vendor and customer, posted in a
    foreign currency

    When an SAP foreign currency valuation is done, all open items


    and balances in foreign currency will be converted to local currency
    using the current exchange rate maintained in the system.
    Therefore, the valuation must be done at the time of closing so
    the correct exchange rate is used. When open items and balances
    posted in foreign currency are valuated, the foreign currency
    program generates a document. It also automatically creates a
    reversal document with a posting date of the FIRST DAY OF THE
    NEXT PERIOD.

    For non-open item managed accounts, the valuation adjustment


    posts directly to the account itself. For open item managed
    accounts, since it is not possible to post directly to a
    reconciliation account for payables or receivables, the valuation is
    posted to an adjustment account. This is a special account that
    must be created for this purpose.

    The accounting entry for open item managed (OIM) accounts is as


    follows:

    Dr/Cr Unrealized exchange gain/loss account

    Cr/Dr GL account being valuated


    The accounting entry for open item managed accounts is as
    follows:

    Dr/Cr Unrealized exchange gain/loss account

    Cr/Dr Balance sheet adjustment account

    Step 1) Enter Transaction Code F.05 in the SAP Command Field


    Step 2) In the next screen, Enter the Following

    1. Enter Company Code for which Foreign Currency Valuation is


    to be carried out
    2. Enter Evaluation Key Date
    3. Enter Valuation Method for Exchange Rate Consideration
    4. Enter Valuation in Currency Type ( Default is 10 : Company
    Code  Currency)
    5. You can filter out Valuation activity by entering appropriate
    parameters in the Open Items Tab Screens.

    Press Execute
    Step 3) In the next screen, a list of G/L Accounts is generated
    which are selected for the Foreign Currency Valuation by the
    Report SAPF100. It evaluates the open items in foreign currency
    as well as foreign currency balance sheet accounts.

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