FOREIGN CURRENCY BALANCES REVALUATION ( FC Balance Revaluation) :
Consider we have taken SBI FC Term Loan on 31.07.09 of 100000 US$ which is equal to 48,00,000 INR @ 48/ US$. Consider that Company has not paid the loan upto 31.03.2010. As per Accounting Standard 11, US GAAP, IFRS it is mandatory to revaluate the FC Loan Balance as on 31.03.2010. Revaluation of FC Balances is applicable to all FC Loans/ Export Vendors/Import Customers Balances except for Advances. If on 31.03.2010 rate of 1 US$ equals INR 50, Difference of INR 500000 ( 100000 US$ x 5 Rs. == 500000). This difference should be transferred to Exchange Loss and charged to P& L Account.
Customization of FC Balance Revaluation:
Step.1 Creation of 3 GL Masters
Account Name Under Group No. Range
A) SBI FC Term Loan A/c Secured Loans 100300 to 100399
B) Exchange Gain A/c Other Income 300100 to 300199
C) Exchange Loss A/c Administration 400300 to 400399
1st A/c
GL A/c# 100301 Comp.Code: PSL F.Year: 2009
Select With Template Button
GL A/c# 100300
Comp.Code: PSL Press Enter
Change Short Text & Long Text to SBI FC Term Loan
Select Control Data Tab
Change Account Currency to USD
De select in Only Blances in Local Currency Check Box
Select Create/Bank/Interest Tab
Remove Interest Indicators and Dates → SAVE
2nd A/c
GL A/c# 300100 Comp.Code: PSL F.Year: 2009
Select With Template Button
GL A/c# 400300
Comp.Code: PSL Press Enter
Step 3. Select Type/ Description Tab
Change Account Group to Other Income
Change Short Text & Long Text to Exchange Gain → SAVE
3rd A/c
GL A/c# 400301 Comp.Code: PSL F.Year: 2009
Select With Template Button
GL A/c# 400300
Comp.Code: PSL Press Enter
Change Short Text & Long Text to Exchange Loss → SAVE
Step 2.Define Accounting Principles:
SPRO---->Financial Accounting ( New)---->Financial A/c Global Settings(New)---> Ledgers--->Parallel Accounting--->Define Accounting Principles
Select New Entries Button
A/c Principle P1 (Text field any thing can enter)
Name / Descriptionof A/c Principle: Indian Accounting Standards
SAVE and Press Enter to save in your request.
Step 3.Assaign Accounting Principles to Ledger Groups:
Same Path ( Next Level to last path)
Select New Enteries Button
A/c Principle : P1
Target: Ledger Group
Select OL for Indian Accounting Standards
( By default all Indian Companies SAVE and Press Enter to save in your request. IAS is defined by SAP)
Step 4.Define Valuation Methods:
SPRO---->Financial Accounting(New)---->GL A/c ( New)---->Periodic Processing----> valuate--->Define Valuating Methods
Select New Entries Button
Valuation Method PSL1 (Text Field)
Description FC Valuation for PSL (Bank Selling Method)
Select Always Evaluate Radio Button
Document Type SA
Ex Rate type for Dr. Balance B (Bank Selling Rate)
Ex Rate type for Cr. Balance B (Bank Selling Rate)
select Determine Exchange Rate Type for A/c Balance Radio Button
→ SAVE → Enter to save in your request.
Step 5.Define Valuation Areas:
Same Path ( Next Line to Old path)
Select New Entries Button
Valuation Area : PA ( Text Filed)
Valuation Method: PSL1
Currency type : Select Company Code Currency → SAVE
→ Enter to save in your request.
Step 6.Assaign Valuation Areas & Accounting Principles :
Same Path ( Next Line to Old path)
Select New Entries Button
Valuation Area : PA
A/c Principles: P1 → SAVE
→ Enter to save in your request.
Step 7. Prepare Automatic Posting for Foreign Currency Valuation:
SPRO---->Financial Accounting(New)---->GL A/c ( New)---->Periodic Processing
-----> valuate--->FC Valuation----> Prepare Automatic Posting for Foreign Currency Valuation
( TC=OBA1)
Double Click on Exchange Rate Difference UG Exchange Rate Key
Chart of Accounts : PSL
Select Right Arrow at Down and Change Valuation Area Button
Valuation Area PA → ENTER
Ex.Rate Expense A/c Exchange
Diff. Key (Exchange Loss) Rate GainA/c
USD ( Text Field) 400301 300100 → SAVE
→ Enter to save in your request.
Step 8.Assaign Exchange Rate Difference Key in Loan A/c ( FS00)
GL A/c : 100301
Comp. Code : PSL
From Menu----> GL Account----> Change
Select Control Data Tab
Exchange Rate
Difference Key
USD → SAVE
END USER AREA FOR FC REVALUATION :
{1} FC Term loan Receipt ( F-02)
Doc.Date: 01.08.09 Comp. Code: PSL Currency : USD
Post.DT: 01.08.09 Type : SA Rate: 45.00
Post Key: 40 A/c # 200100 → Enter
Ignore Warning Message → Enter
Amount : 100000 USD Buss.Area: PSLH
Text: SBI FC Term Loan Receipt → Enter
Post Key: 50 A/c # 100301 → Enter
Amount : * USD Buss.Area: PSLH
Text: + → Menu----> Document ---->Simulate and SAVE
{2} Enter Year End Exchange Rates in Forex Table ( OB08)
Select New Entries Button
| Ex. Rate Type | Valid From | From Currency | Direct Quot | To Currency |
| G( Bank Buying Rate) B( Bank Selling Rate) | 31.03.10 31.03.10 | USD USD | 49.50 50.00 | INR INR |
↓
SAVE
{3} FC Valuation:
Accounting ----> Financial Accounting---->Gen Ledger---->Periodic Processing---->
Closing--->Valuate---> FC Valuation(New) ( TC=FAGL_FC_VAL)
Comp. Code: PSL
Valuation Period: 31.03.10
Valuation Area: PA
Select GL Balance tab
Select Valuate GL A/c Balance Check Box → Execute ( F8)
Select on Postings Button and Select Back Arrow 2 Times
There are 2 types of FC Valuations.
1) Month End Valuation
2) Year End Valuation
If we made Month End Valuation, Exchange Gain / Loss will be double unless
we reverse in next month. So We will reverse the Exchange Gain/ Loss under
Month End Valuation until the Year End. There will be no Reversal on Year End.
we reverse in next month. So We will reverse the Exchange Gain/ Loss under
Month End Valuation until the Year End. There will be no Reversal on Year End.
Procedure for Month End Valuation:
Step 1.Month End Exchange Rates in Forex Table ( OB08)
Enter Month End Exchange Rates then go to FC Valuation Screen
IN FAGL_FC_Val Screen
Comp. Code: PSL Valuation Key Date: 31.08.09 ( Every Month End)
Valuation Area: PA
Select Create Posting Check Box
Post.Date: 31.08.09 Reverse Posting Date: 01.09.09
select Reverse Posting check Box Select GL Balance Tab
Select valuate GL A/c Balance Check Box
GL A/c: 100301 → Select Execute Button ( F8)
Procedure for Year End Valuation:
Step 1.Year End Exchange Rates in Forex Table ( OB08)
Year End Exchange Rates then go to FC Valuation Screen
IN FAGL_FC_Val Screen
Comp. Code: PSL Valuation Key Date: 31.03.10 (F.Y.End Date)
Valuation Area: PA
Select Create Posting Check Box
Post.Date: 31.03.10 Reverse Posting Date: Blank
De select Reverse Posting check Box Select GL Balance Tab
Select valuate GL A/c Balance Check Box
GL A/c: 100301 → Select Execute Button ( F8)
From Menu--->System---->BatchInput----> Sessions
Session : PSL → Click on Process Button ( F8)
Select Display Errors only Radio Button
Select Process Button → Enter
Business Area: PSLH → Enter
Again Business Area: PSLH → Enter
We will get a message that Processing of Batch Input Session is Completed
Select Exit Batch Input Button
To View the Document Posted ( TC=FB03) → Enter
Double Click on 1st Line Item
We can see the FC Revaluation Document Posted.
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