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Group Currency Exchange rate change impact on transaction posted in LC

Former Member
0 Kudos

Hello All,

We are facing a scenario for which

  • Invoice was posted in INR
  • Payment was done in INR


But While posting payment transaction exchange rate gain/loss GL account is triggered. This account has posted a amount in Group Currency and in Local Currency (INR) amount is Zero.


This happened as there was change in group currency exchange rates.


For Reference: Local Currency: INR; Group Currency: GBP

Invoice Entry: (with exchange rate 97.37)


Customer a/c     DR     10000 INR     102.70GBP    

Revenue a/c      CR     10000 INR     102.70GBP

Payment Entry: (with exchange rate 95.45)

Bank a/c                    DR    10000 INR     95.45     GBP

Customer a/c             CR    10000 INR     95.45     GBP

Ex. Rate Gain/Loss    CR     0 INR            2.07     GBP

Kindly share view on this system behaviour as i am not sure if this is fine.

Accepted Solutions (1)

Accepted Solutions (1)

monika_csoti
Explorer
0 Kudos

Hi Pawan,

this is the correct system behavior.

You can check if the group currency is configured to be calculated taking the first local currency as a basis (check transaction code OB22, if field source currency is set to 2: Translation taking first local currency as a basis). If the source currency flag is set to 1 and the system calculates the group currency taking the transaction currency as a basis.

You can also manually change the group currency amount during posting. To do so, before posting drill down on the detail of the line item and press the push button More data.

Please also consider notes 335608 and 546997.

Furthermore, you can check whether you can post the clearing in 1st Local currency instead of foreign currency. and with the flag 'No Forex Rate Difference When Clearingin LC' ON  in the company code (OBY6). Then no exchange rate difference lines are generated. Regard the F1-help of the field T001-XSLTA.

Regards,

Monika

Former Member
0 Kudos

Hello Monika,

Thank you for your reply

  • "No Forex rate difference when clearing in LC" is selected in OBY6 currently.
  • For your reference below is screenshot of current setting of OB22

If we want to avoid posting of exchange rate gain/loss GL account based on group currency. what changes in OB22 you suggest

cgilberg
Active Participant
0 Kudos

Hello Pawan, everyone,

what you should consider here is where this second currency / group currency is actually used, i.e. for which reporting. For instance, using it for legal reporting may or may not require to have these realised FX rate differences posted.

The easiest solution to circumvent the calculation of FX differences here would be to use an Exchange Rate Type which is only set once and then never / seldomly updated, avoiding to have an FX difference calculated and posted.

You have to weigh here if you really need to get rid of the FX difference in group currency. As stated by the earlier answers, I do find the calculation of the realised FX differences postings legitimate, we do have the same setup at my employer. My suggestion also is to keep it this way.

Best Regards,

Christoph

Answers (1)

Answers (1)

former_member229024
Contributor
0 Kudos

Hi Pawan,

As the in invoice and payment in local currency, the valuation difference 0. Due to GBP/INR exchange fluctuation during payment the group currency exchange rate occurs. System is correct. however in above example of yours the total of CR amounts will be equal to DR amounts (may be a typo)

Cheers,