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Boss, you are bang on ... thanks for such a clear explanation.
Regards
Eashwar
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| | | ---------------Original Message---------------
From: VidhyaDhar
Sent: Sunday, March 13, 2011 12:54 AM
Subject: Foreign Currency Valuation issue related to cummulative account balances vs monthly account balances
Hi Eashwar
I am afraid that I am unable to understand you completely.....It is just my
infirmity, Kindly pardon me.
Assuming that Foreign Currency Valuation is carried out ( without using
Delta Posting Logic ),
Every
a) Customer / Vendor / (*) General Ledger Open Line item Managed in foreign
currency
(* G L Managed on open item basis )
b) General Ledger Balance Sheet Account Managed in Foreign Currency and
without open item management
are taken up for valuation.
The Valuation Process considers the Original Exchange Rate prevailing at the
time of the Original Document generation and compares it with the Current
Exchange Rate prevailing during closing Valuation and accounts for the
Difference as a Loss and (or) Profit ( in line with the Valuation procedure
adopted ) on the Key Date. However, the Valuation difference , as you
rightly pointed out , is usually reversed on Key Date + 1. A subsequent
valuation on a different closing date is a repeat process with the
comparison happening between the exchange rate adopted in the original
document vis-a-vis the current exchange rate . Therefore, there does not
seem to be any question of a cumulative valuation involved at all, I
suppose, since every valuation difference is automatically reversed on the
next day (key date + 1) changing the position to status quo.
Perhaps, the use of delta posting logic ( without monthly reversals ) can be
considered as using cumulative values since every closing valuation is
retained and any differential value is posted ( in line with the valuation
procedure adopted and the valuation principle adopted). Therefore,
cumulative postings may possibly arise in the case of valuation with delta
posting ( and without using monthly reversals ).
Kindly correct me if my perception is incorrect.
Regards
VidhyaDhar |
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