Announcement:
wanna exchange links? contact me at sapchatroom@gmail.com.
Posted by
Admin at
Hi Prabha,
You must be aware that foreign currency valuation is carried out as a
closing operation on a. open line items (customer , vendor , G L ) and b.
on Balances of G L accounts maintained in foreign currency and not on open
item basis. This is so owing to the volatile forex market conditions
prevalent. Such valuation might result in a valuation loss or gain also
called as unrealized loss or gain.
A Valuation loss is expensed out it the profit and loss statement and the
corresponding credit would be a liability appearing in the balance sheet in
the form of a balance sheet adjustment account which is grouped below the
sundry debtors to show the receivables and / payables at a fair value
.(Debit valuation Loss Credit Balance Sheet Adj account)
A Valuation gain is revenued in to the profit and loss statement and the
corresponding debit would be an asset appearing in the balance sheet in the
form of a balance sheet adjustment account which is grouped below the sundry
debtors to show the receivables and / payables at a fair value .(Debit:
Balance Sheet Adj account Credit: Valuation Gain).
While some countries are conservative to account for losses only and ignore
gains, there are other countries which take into account valuation gains
also.
Usually, valuation differences are accounted while closing books (at month
end / year end...known as on the key date) and the entries reversed on the
next date (Key date + 1 .... first day of the next fiscal year ). It is also
possible through configuration to make entries which permanently affect the
valuation difference without a subsequent reversal, should you desire so /
should your country impose such accounting .
Your consultant performs the necessary account determination against all
related Customer , Vendor , G L accounts thus mapping the related valuation
loss , gain accounts and balance sheet adjustment accounts.
However, open items need to be cleared subsequently and exchange rate
differences occurring at the time of clearance need to be accounted for. G
L accounts for such realization loss and gain are also mapped for accounting
the realized losses and gains.
Regards
VidhyaDhar
| | | ---------------Original Message---------------
From: pyprabha
Sent: Wednesday, October 27, 2010 4:02 PM
Subject: FOREIGN CURRENCY REVALUATION ENTRIES
What are the journal entries involved in foreign currency revaluation?
1.unrealized profit or loss
2.Realized profit or loss and Balance sheet accounts
following situations.
for month end
for year end
i want know the status of each GL involved in like
Thanks in advance
regards,
Prabhakar |
| __.____._ Copyright © 2010 Toolbox.com and message author.
Toolbox.com 4343 N. Scottsdale Road Suite 280, Scottsdale, AZ 85251
| |  VidhyaDhar
SAP Accounting Top Contributor
Contributed the most posts in a group for a month to earn a Silver Achievement Related Content Most Popular White Papers
In the Spotlight  _.____.__ |
Mark as helpful
