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Foreign currency valuation

Former Member
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In OB09 Transaction code maintiang the accounts for Exchange gain and Exchange loss.

Under exchange rate difference realized.

we are maintaining for loss and gain and under valuation we are maintaing valuation loss.1 and valuation gain.1

under Translation. there are option to maintain Loss,Balance sheet adjust loss,Gain and Balance sheet gain.

In what situation these options are reuired .

Pls explain brief. and under Translation why we have to maintain automatic posting account and when it will get effect.



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Answers (2)

Former Member
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Hello Babu,

Valuation is used as first valuation area and this will be basically done between local currency and foreign currency.

Translation is used as second valuation area and this will be basically done between group currency and foreign currency.

Any loss will be posted in loss account and the same holds with Gain account.

Adjustment account is used to post the adjustments (Double book entry. One entry goes to either loss/gain acc and the second entry goes into this adjustment account ).

The currency fluctuation between the period of invoice posting and actual payment gives the way for loss or gain.

Please let me know if you have questions.



Active Contributor
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In respect of realized cases, why these are required because if you transact in foreign currency and due to currency fluctuation, there will be differences between the currency in which you booked and the currency in which you realized.

In respect of valuation, this is required due to periodend or year-end closing, we need to report on unrealized gain/loss

Translation- if you have foreign branch with assets/liabilities, etc., for consolidation purpose, we need to translate them into local currency

Hope this is clear

S Jayaram