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Re: [sap-acct] Foreign Currency Valuation in SAP

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Posted by Roy B (SAP Financials Expert)
on Jul 25 at 9:16 AM 		Mark this reply as helpfulMark as helpful

Hi VidhyaDha,

I looked at IFRS but they only give a guide to translation
adjustments on consolidation and treat these similarly to the old
FASB 52 as a separate component of equity (non-distributable). No
real help there.

I like the French GAAP treeatment whereby unrealised losses are
provided for in the P & L while unrealised profits are carried
in the balance sheet. This is a conservative treatment and avoids
reporting profits and paying taxes or distributing dividends on
profits which are subsequently not realised, while recognising
potential losses even when they are not certain. Many European
companies adopt this sensible approach. In SAP you have to analyse
the revaluation differences that the system posts and then manually
adjust the unrealised profits back to the B/S. It is a bit of work
but worth doind in my opinion. Hope this helps.

Regards, Roy
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