Treatment of Exchange Rate during Goods receipt

[Former Member]

Hi All,

May i request your assistance in sorting the below issue?

I need a confirmation on the entries when GR is done with exchage rates differences. In my understanding, the entries are followed as mentioned below:

Inventory account Dr

To, GR IR clearing account Cr

and Unreleased gains / loss a/c (Dr or Cr)

SAP is already posting the above mentioned entry.

Now, My client has come back with a differnce entry where according to him the entry should not hit Unreleased gains/loss but should hit Relaease Gains/loss.

i.e.,

Inventory A/c Dr

to, GR IR clearing a/c Cr

qand released gains / loss a/c (Dr or Cr)

Could anyone please confirm which entry is correct?

If the seconf is correct, I would like to know how this can be configured in SAP.

Regards,

MG

[Former Member · Accepted solution]

Hi Mallikarjuna,

At the time of GR entry, neither realised nor unrealised exchnage gain/loss is posted. It would pick up the exchnage rate from p.O. if it is marked as fixed in the P.O. or from TCURR table(transaction code-OB08), if exchnage rate is not fixed in the P.O..

The exchnage rate difference account is posted at the time of MIRO and this difference is the difference between MIGO and MIRO rate if any..

Relaised gain/Loss posting : This arises when you actually make payment to a Vendor or post collections from customer and this is called realised gain/loss, because this is the final rate at which you either make payment or collect or say the rate at which your books of accounts are actually posted.

Unrealised Gain/Loss posting : At the end of the month/Qtr/Year, if any transaction in currency other than your company code currency is in open item status, then a revaluation is carried out to revalue the liabilities/assets with that date exchnage rate and then unrealized gain/loss is posted and this is usually reversed at the beginning of next period( Reversal or not depends on whether you have activated delta logic or not). This is to give a true & fair picture of books of accounts of all Assets/Liabilities.

Hope this helps and if this is not your question.. please clarify further

BR,

Kavita

[eduardo_hinojosa]

Hi

Please, see Note 308008 - FAQ: Posting logic: GR/IR clearing account, question 12 (Postings with exchange rate changes).

Other useful notes

SAP Note 128 - Exchange rate differences between GR/invoice

SAP Note 301247 - Exchange rate differences due to rounding during GR

and related notes

I hope this helps you

Regards

Eduardo

[Former Member]

Hi All,

Thanks for all your insights. But rather going by how SAP works, I would like to know whether during GR, whether the unrealised G/L should get hit?

We have two GL accounts to capture Exchange rate differences ,realised and unrealised. During, GR the system is capturing Unrealised.

Client is insisting that it should be reealised Exchnage rate difference.

But once again for sharing your thoughts, which has cleared other doubts.

Regards,

MG

[eduardo_hinojosa]

Hi

As notes suggest, there could be a difference in time between GR and IV, and you can have differences between the exchange rates. Depends on GAAP, but usually, you valuate the GR in the date you have the goods issue and you need the exchange rate for this day. After the date for the IV usually is in the billing document, than usually is the date for the delivery date for these goods or services (it should be the same), but sometimes you can have a billing document for a month, so, you will find differences.

Perhaps you mean as realised differences, the exchange differences during the payment (respect to the IV). Am I right? If it's true, go to transaction OB09.

I hope this helps you

Regards

Eduardo

[former_member188028]

This is just exchange rate difference, unrealized /realized doesn't apply here. Also please check sap note 191927.

[Former Member]

Hi MG,

Suppose you have activated exchange rate fixed indicator in PO and the exchange rate entered is 44. Now, the GR is posted in the next month and at that time the exchange rate maintained in OB08 was 46. Then in GR the inventory valuation will happen at exchange rate 44 and the difference (46-44) will be posted to the exchange rate difference gain/loss account.

If the exchange rate fixed indicator is not activated in PO then during GR system directly picks exchange rate from OB08 for inventory valuation and there will not be any exchange rate differences.

Exchange rate difference will occur at invoice posting, when you post GR and MIRO in different months. At that time system compares the exchange rate in GR with the exchange rate in MIRO and if there is any difference found then it is posted to the exchange rate gain/loss account.

Thanks,

Ankur

[Former Member]

Hello Ankur,

The PO is raised in forex and as mentioned by you should the Exchnage rate difference be posted to unrealised gains/ loss or released gains / loss?

If Unrealised Gains/loss account, then I would like to know the Accounting principle logic. I need to know for better understanding on the Forex behaviour.

Please note, that as of now when GR is done in our system Unrealiased G?loss is getting posted.

Regards,

MG