Foreign currency valuation is to be done for preparing the financial statements at a key date. Documents posted in foreign currencies have to be converted to company code currency for preparing the company financial statements. Your company financial statement can include only those transactions which are posted in company code currency.
Hence all the postings which are open items and items which are posted in GL accounts with foreign currency have to be evaluated in company code currency. Valuation is performed at the exchange rate on the valuation date. In that way gain or loss is calculated and posted to exchange rate gain/loss accounts.
Configure Foreign Currency Valuation
Relevant Customizing for Foreign currency valuation in SPRO -> OB59 & OBA1.
1. Use Tcode OB07 to configure the Exchange rate type,
say B – Bank selling, G – Bank buying & M Average rate.
2. Use Tcode OBBS to maintain a translation ratio for the 2 currency which you want to create, say USD : INR.
Here you will find direct quotation & indirect quotation according to your requirement you need to maintain.
3. Use Tcode OB08 to maintain the Exchange rate, validity period of that exchange rate.
To record the profit & loss gained through the difference in exchange rate, you can do that through the following steps
1.Use Tcode OB59 to configure valuation method, in the screen check the check boxvaluate all the time & do the remaining settings.
2. create 2 G/L a/c 1 to record profit & other to record loss incurred through exchange rate, that should be auto posting.
3. Use Tcode OBA1 to assign those G/L to automatic posting.
Give your chart of account and 2 G/L you have created.
4. Next use Tcode F.05 to execute the Forex Run.
Also See: What is General Ledger Planning in SAP?
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