Not to capitalize foreign exchange difference to Asset

[AM29]

Hello SAP Team,

We have a request from our customer "Not to capitalize the foreign exchange rate difference (PO & Invoice) to fixed assets". In SAP , it is the standard way to capitalize the difference to assets at the time of invoice.

Can we make any expert configurational change to post the foreign exchange rate difference to P&L?

Regards,

Anmol Malhotra

[OwenLiu]

Removed tags other than Finance.

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Q&A for SAP S/4HANA Cloud Public Edition - How to ... - SAP Community

[BobShen]

SAP S/4HANA Cloud Public Edition: Foreign Exchange Rate Difference Handling for Fixed Assets

In SAP S/4HANA Cloud Public Edition, the standard process capitalizes foreign exchange rate differences between purchase orders and invoices to fixed assets. However, it is possible to configure the system to post these differences to the profit and loss (P&L) account instead. Here are the key points:

1. Configuration Options:

   • You can configure how exchange rate differences are handled for incoming invoices in foreign currencies .
   • This configuration is done at the company code level .

2. Available Methods:

   • Rate at Goods Receipt: Exchange rate differences for standard price materials, moving average price materials, and account-assigned orders are not allocated to inventory/consumption .
   • Rate at Invoice Receipt: Exchange rate differences for moving average price materials and account-assigned orders are allocated to inventory/consumption .

3. Configuration Steps:

   • In your configuration environment, use the search function to open the activity ID 104318 "Configure How Exchange Rate Differences Are Treated" .
   • Select the appropriate method based on your requirements.

4. Considerations:

   • For standard price materials, exchange rate differences can be allocated to inventory/consumption at period-end closing in actual costing when using the Rate at Invoice Receipt method .
   • Exchange rate differences for stock shortages with moving average price materials are not allocated to inventory .

5. Impact on Asset Valuation:

   • The chosen method will affect how foreign exchange differences are treated in relation to asset valuation.
   • By selecting the appropriate method, you can control whether these differences are capitalized or expensed to P&L.

6. Additional Options:

   • For more complex scenarios, you may need to consider custom developments or additional configurations to fully meet your requirements.

It's important to note that changing these settings may have significant impacts on financial reporting and asset valuation. Therefore, it's recommended to thoroughly test any changes in a non-production environment and consult with your financial team to ensure compliance with accounting standards and company policies.