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Reply from VidhyaDhar on Sep 13 at 11:30 PM Hi,
In general exchange rate differences can occur with regard to amounts
receivable and amounts payable in foreign currency and in cases some
assets held in foreign currency, as well. These can happen in the General
Ledger (Balance sheet items only) / Customer dues and Vendor dues area.
Such differences arising may constitute loss / gain which needs to be
accounted for ( as may be required ).
Such losses and gains accounted at the time of clearing of line items and
constitute realization differences.
There may also be differences which may arise when the line items ( or
closing balances where line items are not maintained ) may need revaluation
for the purpose of accounts closing and periodic reporting and such
differences constitute valuation differences.
Many aspects contribute to the accounting of exchange rate differences:
1. Maintenance and periodic update of exchange rate tables ( at times,
these are also updated at the document level,during transaction posting.
2. Planning and Maintenance of G L Master records ( including customer /
vendor reconciliation accounts ) and related fields in terms of currency
and exchange rate differences
3. Configuration of Valuation Method for valuation areas and preparation of
Ledgers / Accounts for postings
4. Suitable Account determination for Losses, Gains and Balance sheet
Adjustment Accounts, as may be necessary.
5. Periodic execution of Forex Valuation Programs and allied activities
during closing of accounts
All these activities are essential for accounting exchange rate differences.
Regards,
VidhyaDhar
| | | ---------------Original Message---------------
From: helenrrico
Sent: Thursday, September 13, 2012 10:52 PM
Subject: Exchange Rate Differences and Configuration
It is configured in FI -> AR/AP -> Open Item Clearing -> Define Account for Exchange Rate Differences.
Define the g/l accounts with forex, double click and under Exchange rate difference realized, enter the g/l account for loss or gain and under valuation, also enter the gl accounts. |
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