hi
what should i check in the same ? SAP configuration or ?
--- On Mon, 26/7/10, VidhyaDhar via sap-acct <sap-acct@Groups.ITtoolbox.com> wrote:
From: VidhyaDhar via sap-acct <sap-acct@Groups.ITtoolbox.com>
Subject: Re: [sap-acct] Foreign Currency Valuation in SAP
To: "virji_guruji" email@removed
Date: Monday, 26 July, 2010, 12:05 AM
Posted by VidhyaDhar (User-friendly SAP FI Consultant)
on Jul 26 at 12:00 AM Mark as helpful
Hi Friends
I tried to simulate the issue which I had posed earlier regarding Foreign
Currency Valuation and I had used the lowest value principle .
I posted a customer invoice for 1000 USD ( Local currency EUR ) and
simultaneously I posted a Vendor Invoice on the same day for 1000 USD. The
currency rate fluctuated on the date of Foreign Currency Valuation and
theoretically a loss occurred with regard to my customer invoice ( My
customer would be paying 500 EUROS lesser ) and a profit occurred with
regard to my vendor invoice ( where I needed to pay 500 Euros lesser ).
The SAP system is intelligent enough to book losses only ( arising out of
the lesser sum my customer would pay ) and ignore the virtual gain ( where I
theroetically need to pay to my vendor 500 Euros lesser ). I ran the Foreign
Currency Valuation run once only , including both my customer as well as
vendor items in the same run.
Since I had used the lowest value principle, the system was smart enough to
book a loss with regard to my collectibles and at the same time ignore the
virtual gain which happens with regard to my vendor payable item. Therefore,
the system does not thwart the accounting principle, it has been proved.
I thought I could share this information with everybody interested to know.
Thanks to you all friends.....and a special word of thanks to Roy and
Sanjay.
Regards
VidhyaDhar
On Mon, Jul 26, 2010 at 9:08 AM, VidhyaDhar via sap-acct <
sap-acct@groups.ittoolbox.com> wrote:
>
> Posted by VidhyaDhar (User-friendly SAP FI Consultant)
> on Jul 25 at 11:37 PM
> Hi Sanjay
>
> Thanks for your views.
>
> Of course there are two different exchange rates in India ( one for Export
> and one for import ). Do I imply that you have two valuation methods which
> are assigned ( one for imports and one for exports ) and two separate F C
> valuation runs need to be made ( one for booking losses and another for not
>
> booking profits ) ?
>
> I am asking this because if both customer and vendor dues are valuated in a
>
> single run ( which uses the same valuation procedure ) then both losses and
>
> gains can be booked (eg. if customer open items book a loss then
> automatically vendor open items would book a gain or vice versa ) ? Or is
> the SAP system tailored enough to book losses and ignore profits , assuming
>
> that I use the lowest vaue principle ?
>
>
> Regards
>
>
> On Sun, Jul 25, 2010 at 9:40 PM, Sanjay-t via sap-acct <
> sap-acct@groups.ittoolbox.com> <http://groups.ittoolbox.com%3E> wrote:
>
> > Posted by Sanjay-t
> > on Jul 25 at 12:56 PM Hello
> > VidhyaDhar,
> >
> > Nice to see your post on grilling the basic nature of accounting.
> >
> > 1. In India, based on CBEC has two different exchange rate for Import and
>
> > Export.
> >
> > 2. I am not sure but Roy can you clarify there is option while
> revaluation
> > where we can give forex gain and losses account separately, Wherein if it
> is
> > loss we can use P/L and if it profit ahhh we shall keep it Balance sheet
> and
> > make reversal entry on the next day.
> >
> > The very nature of law of conservatism can be achieved on a click.
> >
> > Regards,
> > Sanjay.
> >
> >
> >
> >
> >
> > ---------------Original Message---------------
> > From: VidhyaDhar
> > Sent: Saturday, July 24, 2010 1:15 PM
> > Subject: Foreign Currency Valuation in SAP
> >
> > > Hi Friends
> > >
> > > Foreign Currency Valuation is performed using a valuation method which
> > includes a single procedure such as Lowest Value Principle . If my
> company
> > code were to revalue my receivable open items and there is an unfavorable
>
> > drop in exchange rate , I end up booking a loss arising out of such a
> drop
> > and I can understand the logic of conservatism being used. However , if
> on
> > the same day I were to revalue my payable open items using the same
> > procedure, Would I not be ending up booking a profit ? If the lowest
> value
> > procedure results in booking a profit, then isn't the premise of the
> > valuation procedure conforming to conservatism principle lost ?
> > >
> > > Example Customer Invoice raised for 1 USD = 45 INR on 01 Jan 2010
> > >
> > > Upon revaluation (using lowest value principle) at the time of closing
> (
> > viz. 31 Jan 2010) the exchange rate is 42 INR - then I would book a loss
> of
> > 3 INR , which is perfectly understandable.
> > >
> > > However, if I had a Vendor Invoice for 1 USD = 45 INR on 01 Jan 2010
> > >
> > > Upon revaluation using the same principle on 31 Jan 2010, My liability
> > comes down by 3 INR leading to my booking a profit of 3 INR.
> > >
> > > If the system allows me to book profit using lowest value principle,
> then
> > isn't the premise of conservatism underlying the lowest value principle
> lost
> > ? Does not the very nomenclature of lowest value principle becomes
> > questionable ? Or Am I missing out something and comprehending things
> > incorrectly?
> > >
> > > Would appreciate your expert opinions, please
> > >
> > > Thanks in Advance
> > >
> > > Regards
> > >
> > > VidhyaDhar
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