What is the impact on balance sheet after foreign currency valuation.

[Former Member]

Hi,

can any one tell me what is the impact of foreign currency valuation in Balance sheet particularly on debtors and creditors.

Regards,

Joydip

[Tiger_007]

Hi

Forex valuation will be done for open invoices posted with foreign currencies. i.e. Document Currency not equal to Local Currency / company code currency

when you do Forex valuation for customers and vendors system will post Unrealized Forex Gain or Loss for open invoices for customer and vendors at the end of the month based on closing exchange rates. this will be reversed immediately on following month.

while posting this unrealized gain or loss system will not post to one adjustment account i.e. this account will be linked to recon account i.e. customer or vendor.

when you clear invoices following month system will post Realized gain or loss on open invoices collections or payments.

Regards

Srini

[Former Member]

Dear Joydip Das,

          Foreign currency valuation is done because companies prepare their balance sheet in their own currency and their may be certain transaction which has been taken place in foreign currency.

So to maintain these transaction, FCV is used. This will impact your Profit and Loss account by either increasing companies profit by "foreign exchange gain" or it may reduce the profit by "foreign exchange loss" so ultimately the P&L Net Profit or Loss will be transferred to "Balance Sheet" and finally increase the share holders Capital investment.

But since this is required to finalise the balance sheet of company at every month end so these posting has been reversed on first day of next month unless that foreign currency transaction has been closed fully.

Hope this is clear to you. Reward if above explanation helps you.

Regards

Deepak Kumar

[former_member655476]

FCV, it's a month end process. Executes becoz of transactions posts in foreign currency, when it runs the transactions will calculate exchange rates maintained in OB08, and posts exchange gain/loss to respective GL's in company code/Local currency. becoz balance sheet would be maintained in local currency.

Regards,

Naveen.