Hi Ron
Further to my earlier mail, Let me say one thing more.
Choose always valuate procedure if you want similar treatment for customers
and vendors , provided your country allows it. That valuates both losses and
gains.
Regards.
Regards
VidhyaDhar
On Tue, Jul 27, 2010 at 9:11 AM, geevidhyadhar . email@removedwrote:
> Hi Ron
>
> Have not had an opportunity to read your posts for quite some time and I am
> glad to read one now.
>
> That was a tricky question which you posed. I did simulate such a case
> also. When I did Foreign Currency Valuation by adopting the lowest value
> principle, the system treated a receivable as a receivable and a payable as
> a payable ( it did not net receivable and payable of the same business
> partner who is both a customer and vendor ) and valued the line items
> separately.
>
> The system faithfully stuck to the lowest value principle and booked a loss
> in the customer line item ( since my receivable on the date of Foreign
> Currency Valuation was lesser ) and ignored the virtual gain in the vendor
> line item ( since I used lowest value principle ). I guess that the system
> behaves fine as per the principle.
>
> Any way, I guess a customer vendor equating relationship , I feel , perhaps
> has nothing to do with valuation since the principle is more important (
> viz. lowest value principle booking losses using the principle of
> conservatism and ignoring anticipated gains ). Well ! It can happen within
> the same customer account where in one line item ( using foreign currency '
> X ' booking a loss ) the system books a loss and in another ( using another
> foreign currency ' Y' noticing a virtual gain and ignoring it ). I feel
> that whether it is a) multiple line items with different currencies of the
> same business partner or b) a . Multiple line items of the same business
> partner who plays a dual role as customer and vendor ( and invoiced using
> same / different currencies ), the system does not bother about such
> things. It rather goes by the principle ( lowest value principle , as in the
> case I tested out ) and seems to be consistent in that. This is what I
> observed by testing out.
>
> However, It is likely that my judgment through observation is perhaps
> incorrect ( may be I missed out some essential criterion ) and I would like
> your views also in this regard.
>
> Regards
>
> VidhyaDhar
>
>
>
> On Tue, Jul 27, 2010 at 3:45 AM, ron.roberts via sap-acct <
> sap-acct@groups.ittoolbox.com> wrote:
>
>> Posted by ron.roberts(Managing Consultant)
>> on Jul 26 at 6:12 PM So
>> now let's add some complications
>> 1. suppose that a single customer is also a vendor. If the customer has a
>> 100 debit and the vendor has a 110 credit, do you just revalue the
>> customer?
>> 2. taking this to the extreme, if the vendor has some debit items and some
>>
>> credit items, do you just revalue the debit items?
>>
>> It seems to me that vendor payables and customer receivables are very
>> similar in nature and that they should be handled similarly, not
>> differently. Who makes these rules? (OK, I know, but do you see my point?)
>>
>>
>> On Sat, Jul 24, 2010 at 1:15 PM, VidhyaDhar via sap-acct <
>> sap-acct@groups.ittoolbox.com> <http://groups.ittoolbox.com%3E> wrote:
>>
>> > Posted by VidhyaDhar(User-friendly SAP FI Consultant)
>> > on Jul 24 at 1:12 PM 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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