Foreign Currency Revaluation F.05 Issue

According to FAS 52, transactions that result in a change in cash should go to the P&L account. In the case of a revaluation due to a timing difference(Monthend/yearend revaluation) Realization Gain/Loss posted to B/S account.

The US Financial Accounting Standards Board (FASB) requires you to revaluate foreign currency postings in payables and receivables on a monthly basis.

Additionally, you must calculate the exchange rate gain or loss between the local currency and group currency exchange rates to make a cumulative translation adjustment (CTA).

Currency type 10 revaluation is the difference of the open payables/ receivables balance of the current periods, using the current exchange rate, less the original or prior periods.

F.05 Foreign Currency Revaluation Issue

You select the original or prior periods depending on whether you calculate incremental or cumulative balances.

Companies running the original method of SAP foreign currency revaluation are not completely FASB 52 compliant.
They probably are not getting the correct translation posting from currency type 10 revaluation to their group currency reporting.

SAP has introduced a second method using valuation areas. It solves some problems and provides correct reporting, but carries some disadvantages. I developed an undocumented third method of execution through numerous implementations I’ve worked on. It combines the best of both the original method and the recently implemented valuation method.

I’ve tested it through mySAP ERP Central Component (ECC) 6.0.
I’ll describe these methods and the advantages and disadvantages of each using a sample company with the following currency types: transaction currency is GBP, local/company code currency is EUR, and group currency is USD.

Currency type 30 revaluation is the difference of the current period’s valuated balance of open ayables/receivables less the original or prior periods.

You can execute the foreign currency revaluation at month-end to post currency type 10 and type 30 revaluations via transaction code F.05.

Also See: What is General Ledger Planning in SAP?

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