Operative and Parallel Valuation
I cannot get my head around this and I am sure someone can explain it -- what are the differences between Operative and Parallel Valuation?
I am a technical guy, who is not involved into Finance, especially GL areas. But what see so far is both these areas are used to revaluate deals and only difference I see is that parallel valuation creates entries during re-valuation for each individual line item; while operative does one per transaction.
If that is not critical, technically I should be able to create only one valuation area, and that should be operative area (001)
Little bit of background info: we are moving from R3 to ECC6. in ECC6, operative valuation is a mandatory and it has to be setup. While on R3, my client had only parallel area (004). so I don't see a point of mapping both valuation areas in ECC. I should be able to get away with 001. Am I correct?
I assume the valuation area you are asking about is in transaction manager component only. Technically all valuation areas are same in the sense that they have the same functionality. But from a functional stand point, every valuation area is determined based on either different accounting principles or different valuation needs. For e.g. one valuation area can be for your local GAAP while one can be for IFRS. It all depends on the business requirements whether you need multiple valuation areas at all or you can use one itself.
By default 1 valuation area is required and hence 001 will be active and this will be your operative valuation area. Any other valuation are you define will be parallel valuation area. Now if you dont want other valuation areas, then you need not create them. In your system, if you have been using 004 as for lets say IFRS and after upgrading you can configure 001 according to IFRS itself if you dont want VA according to any other GAAP.