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Foreign currecny valuation

Former Member
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Hello experts,

I have a small doubt reg FCV.......

i have posted an inv for rs.50,000/- on 10.05.2008 and I am paying this inv on 20.05.2008 for the same amount

Parameters maitained: GL open item mgmt, forex table etc., and also defined valuation method, account determination etc.,

Now i want to valuation for this scenario...how? and in F.05 what should we need to maintain? what are the entries system will generate?

could anybody share your thoughts please. Will assign good points

thanks

anita

Accepted Solutions (0)

Answers (4)

Answers (4)

Former Member
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Hello Ravi & Suresh,

While assigning gl accounts in OB09 i am getting some doubts here.

Chart of Accounts 1000

GL Account ? (what is the GL account here B/s

or P & L a/c)

Exchange rate diff realized:

Loss GL A/c (ok, assigned)

Gain GL A/c( do )

Valuation:

Valuation Loss 1 ? (what is the GL a/c B/s or P & L )

Valuation Gain 1 ? (what is the GL a/c B/s or P & L)

Bal sheet adj 1 ? (what is the GL a/c B/s or P & L)

Please clarify me and again assign points

thanks

anita

Former Member
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Except for the balance sheet adjustment account all will be P & L Account. Balance sheet adjustment account for valuation will be Balance sheet account

Former Member
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GL account in ob09 in first column represents which GL account you want the system to revalluate. It will always be Balance sheet item. Profit and loss items are not valuated. Revenue/Expenses are recognised based on the actual.

Here you mention the GL accounts you want to valuate. Examples Accounts receiveable - Exports.

Accounts payable Imports and other GL Items where entries are posted in Other than local currencies. Some Examples like Foreign currency Loans, Packing Credit Loans in USD, Fixed Deposits in FC, Bank accont in Foreign currency, Branch Imprests in FC, Cash in Hand in FC , Fixed ASsets in Foreign Currency ( Assets Situated out side India in FC ) etc

You have to assign GL accouns for all the above categories.

Former Member
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Thanks allot to mr.ravi & suresh,

assigned full points

thanks

anita

Former Member
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Hi Anita ,

First understand why foreign currency valuation is done. ( in your example where is foreign Currency )

A Sale has been made for USD100 and assume you have maintained the Exchange conversion 1 USD-39.00 INR. Hence sales value will be 100 USD in document currency and 3900 INR in Local currency.

In the month end/year end ( Valuation date ) your sundry debtors/accounts receivable balances will be 100 USD and 3900 INR ( Assuming no payment received till the date ). For example on valuation date the currency conversion rate is say 39.50 INR for 1 USD.

Hence the valuation date your accounts receivable is worth 3950 in INR and 100 USD, but in your books of accounts shows the balance of 100 USD and INR 3900.

Hence you need to valuate the foreign exchange on valuation date, Hence in the above example if you execute the Foregn currency valuation ,the system will generate an Income of 50 INR and increase the foreign Currency valatuion BS account by Rs 50. ( 3950 - 3900)

The system is not changing any outstanding in terms of USD i.e document currency

Former Member
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Hi Friend,

In the given scenario, you no need to run any F.05 or any other foreingn currency valuation transactions.

The foreign currency only comes into picture for open items on the month end, But where as in your case you are paying on 20 th itself.

So on the date of payment system checks the exchage ratio from table and if gain or loss will be posted to the predefined a/c.

In your example you have not given any foreign currency. If I take your exple as Local currency as INR and Foreign currency as USD.

If you post an invoice for 50000 USD on 10th and Rate is 40 on that date

The invoice entry would be

INR USD

Vendor a/c Cr 2000000 50000

EXp or GR/IR Dr 2000000 50000

On the date of payment i.e on 20th if exchange rate is 41

INR USD

Vendor a/c Dr 2000000 50000

Cash/ Bank Cr 2050000 50000

Exchage loss Dr 50000

There wont be any entry in Foreign currency, but only the difference will be posted to Exchange gain/Loss a/c configured in the followign node.

SPRO -


> Financial Accounting (New) -


> Accounts Receivable and Accounts Payable---> Business Transactions -


> Outgoing Payments---> Define Accounts for Exchange Rate Differences.

Please reply for any clarifications............

Thanks & Regards

Ravi C