hi kamalakar,
you can find detailed information about calculation of values with examples at related note
331910 - MR1M, MIRO: Postings in foreign currency/local currency
in detail as you can see at the note,
Conversion rules with regards to exchange rate and base currency:
1. Document or transaction currency --> local currency:
If you do not enter a different exchange rate during document entry,
- the current exchange rate is taken from the exchange rate conversion table if
the exchange rate is not fixed in the purchase order
- the fixed exchange rate is transferred from the purchase order, provided that it is set there.
If you enter a different exchange rate during document entry
- the exchange rate entered is used if the exchange rate is not fixed in the purchase order,
- the manual entry of an exchange rate is prevented if the exchange rate is fixed in the purchase order.
- 2. The calculation of the values in the material ledger for currency types that are not managed in FI:
As described in Note 374496, the conversion to the average rate is carried out from the transaction currency at the posting date. These conversion rules cannot be customized. You can only change them by modifying the program.
For currencies that are managed in the material ledger and in Financial Accounting, the conversion is carried out in accordance with Customizing in FI (as described in point 3).
3. Calculation of the values for parallel local currencies in FI:
The conversion rules are set in Customizing (transaction OB22) and used during value calculation.
You can make the following settings:
- Exchange rate type
- Base currency
- Conversion date
It is not possible to enter an exchange rate manually for these currencies during invoice entry.
Separate and parallel calculation of the values in FI currencies instead of line by line conversion:
A distinction must be made between 2 cases that basically differ in terms of the posting and clearing logic of the GR/IR account (in the following, the foreign currency of the invoice (also called transaction currency) needs to equal the purchase order currency):
1. Conventional invoice verification (transactions MR01, MRHR, and MRHG) and logistics invoice verification (transactions MR1M and MIRO) up to and including Release 3.1:
The invoice item value entered (in the foreign currency) is converted to the local currency (using the rate on the invoice). Then a posting is carried out to the GR/IR account according to the usual logic; in other words, the goods receipt is cleared on a quantity basis. Afterwards, a conversion is carried out line by line back to the transaction currency; that is, price difference (PRD) or stock posting (BSX) lines that may have arisen are independently converted back again using the invoice rate. Generally, a balance remains on the GR/IR account in the transaction currency.
2. Logistics invoice verification as of Release 4.0 (transactions MR1M, MR1G, and MIRO):
The invoice item value entered is converted to the local currency (using the rate on the invoice) and the postings are then independently generated in parallel in the local currency and transaction currency. This ensures that the GR/IR account is correctly cleared in both currencies (for a restriction see 'Restriction for 2.').
Note that the 'Restriction for 2' was corrected with Note 1223986.
Example:
Currencies:
Transaction currency | 1st local currency | 2nd local currency | 3rd local currency
USD | MXN | USD | DEM
Exchange rates:
MXN / USD = 7.7 to 31 July | DEM / USD = 1.8 to 31 July
MXN / USD = 10.0 as of 1 August | DEM / USD = 2.0 as of 1 August
Purchase Order:
in USD above 100 pcs for each 1 USD
Goods receipt on 28 July:
USD | MXN | USD | DEM
Expense 100.00 | 770.00 | 100.00 | 180.00
GR/IR 100.00 | 770.00 | 100.00 | 180.00
1. Invoice with MR01 posted on 16 August:
USD | MXN | USD | DEM
Creditor 100.00- | 1000.00- | 100.00- | 200.00-
GR/IR 77.00 | 770.00 | 77.00 | 154.00
Expense 23.00 | 230.00 | 23.00 | 46.00
2. Logistics invoice posted on 16 August (active ML):
USD | MXN | USD | DEM
Creditor 100.00- | 1000.00- | 100,.0- | 200.00-
GR/IR 100.00 | 770.00 | 100.00 | 180.00
Expense 0.00 | 230.00 | 0.00 | 20.00
The following is true for dealing with processing the 2nd and 3rd local currency:
If the material ledger is active, the GR/IR account is also cleared for the 2nd and 3rd local currency (as in case 2).
If the material ledger is not active, the system calculates the amounts for the 2nd and 3rd local currency using a line by line conversion from the local or transaction currency (as in case 1).
Note: Since this logic has not been implemented in the conventional invoice verification in general and in the logistics invoice verification prior to Release 4.0, the invoice clearing value in the foreign currency has not been specified in the purchase order history for these documents. As a result, amounts that are too large are posted in the foreign currency after an upgrade from 3.x to 4.x or after the change from a conventional invoice verification to the logistics invoice verification in an invoice for a purchase order for which old documents exist. However, these amounts are correct: If, due to the invoice, the total quantity invoiced is equal to the total quantity delivered, the system also clears the GR/IR clearing account in the foreign currency. Since the old documents did not clear the foreign currency, the clearing amount increases correspondingly.
Restriction for 2.
Due to the logic for determining the purchasing history values, a difference may occur on the GR/IR clearing account in the foreign currency, if all GRs were completely reversed by quantity and if the exchange rate has changed between GR and GR reversal:
Example:
Transaction currency AUD | 1st local currency EUR
Exchange rate: EUR / AUD = 0.5448
Goods receipt above 10 pcs:
EUR | AUD
Expense 138.11 | 253.50
GR/IR 138.11- | 253.50-
Table exchange rate changed: EUR / AUD = 0.8448
Logistics invoice above 10 pcs with table exchange rate:
EUR | AUD
Creditor 214.16- | 253.50-
GR/IR 138.11 | 253.50
Expense 76.05 | 0.00
Full reversal of goods receipt:
EUR | AUD
Expense 214.16- | 253.50-
GR/IR 214.16- | 253.50-
Full reversal of invoice receipt or credit memo above 10 pcs:
EUR | AUD
Vendor 214.16 | 253.50
GR/IR 214.16- | 343.52-
Expense 0.00 | 90.02
In this case, the value of goods received in foreign currency is determined from the value of goods received in local currency by translating at the table exchange rate, since at this time it is not clear whether the zero value originates from an earlier release and therefore has to be determined subsequently.
If invoices were posted in other currency than the purchase order currency or the local currency, rounding differences due to currency translation may occur on the clearing account for foreign currency. For this reason, a new logic has been introduced in release 4.7 which causes the relevant values to be also kept in purchase order currency in order to avoid rounding differences on the clearing account for purchase order currency and to keep the rounding differences for other currencies as low as possible (the new logic only applies to purchase orders and scheduling agreements for which all follow-up documents were posted in 4.7).
Exchange rate rounding differences:
In the conventional invoice verification, a separate posting line was generated for exchange rate rounding differences. In logistics invoice verification, a created rounding difference in the corresponding currency is settled with the vendor amount in this currency.
Example:
EUR | USD
Local currency = USD
Exchange rate = 1.004 USD / EUR
Logistics invoice in EUR:
EUR | USD
Creditor 2.00- | 2.00-
Expense 1.00 | 1.00
Expense 1.00 | 1.00
For the vendor item, the result is 2.00- EUR x 1.004 = 2.01- USD. The exchange rate rounding difference of 0.01 USD created in the document is added to the creditor amount in local currency, resulting in an amount of 2.00- USD.
It is often assumed that the incorrect exchange rate was used (2.00- USD / 2.00- EUR = 1.00000 and not 1.004). However, as you can see from the example, this is not the case.
Generated lines
The lines generated from an entered line in the accounting document are to be treated as total. The result of the total of the lines (multiplied by the corresponding exchange rate) must be the total of these lines in the target currency. You can, for example, post the GR/IR account, carry out a price difference posting and an exchange rate posting from a line. Since the price and the exchange rate difference are settled with each other in some cases, it can happen, for example, that there is only a price difference in one currency and that the amount of this line = 0.00 in all other currencies.
The following applies to every individual currency. The exchange rate and price differences calculated by the system are compared with each other:
If the absolute value of the exchange rate difference is greater, the price difference of the exchange rate difference is added and the price difference is set to 0.
If the absolute value of the price difference is greater, the exchange rate difference of the price difference is added and the exchange rate difference is set to 0.
This settlement is not carried out if exchange rate differences are set between invoice receipt and planned exchange rate (X) in Customizing of processing exchange rate differences in invoice verification.
Example:
Local currency = USD
Material: Standard price = 10.00 USD
PO in EUR, standard price material 10 pcs for 10.00 EUR/pc
Exchange rate EUR/USD: 0,41667
Goods receipt posted: EUR USD
Stock = Value from material master 240.00 100.00
GR/IR = Value of purchase order 100.00- 41.67-
Price diff. = Settlement of these values 140,00- 58,33-
Invoice:
150.00 EUR = Gross invoice value
15.00 EUR = Material price in the invoice
Exchange rate: A) 0.2
B) 0.6
Calculation of posting entries with regard to price difference and exchange rate difference:
1. Calculation of the exchange rate difference on the basis of the
original material value of 100.00 EUR
KDM = (GR/IR quantity / GR quantity)*
(GR val. in local crcy (with new exch.rate)- WE val. in local crcy)
A) (10/10)*((100 * 0.2) - (100 * 0.41667)) = 20 - 41.67 = 21.67- USD
B) (10/10)*((100 * 0.6) - (100 * 0.41667)) = 60 - 41.67 = 18.33 USD
2. Posting to GR/IR account:
Clearing with 41.67, since GR quantity = IR quantity
3. Price difference:
PRD = amount in local currency - KDM - GR/IR entry
A) (150 * 0.2) - (-21.67) - 41.67 = 10.00 USD
B) (150 * 0.6) - 18.33 - 41.67 = 30.00 USD
4. Settlement of price and exchange rate differences:
Different signs?
A) Yes:
ABS exchange rate diff. > ABS price diff.:
ExchRDiff.= ExchRDiff. + Price diff. = 21.67- + 10 = 10.67- USD
Price diff. = 0.00 USD
USD EUR
Creditor KBS 30.00- 150.00-
GR/IR WRX 41.67 100.00
Price difference PRD 0.00 50.00
Exch. rate diff. KDM 10.67- 0.00
B) No:
Amounts determined are posted separately:
ExchRDiff. = 18.33 USD
Price diff. = 30.00 USD
USD EUR
Creditor KBS 90.00- 150.00-
GR/IR WRX 41.67 100.00
Price difference PRD 30.00 50.00
Exch. rate diff. KDM 18.33 0.00
Subsequent debit:
Exchange rate EUR/USD: 0,8
Subsequent costs:
A) 100 EUR
B) 10 EUR
1. Calculation of the exchange rate difference on the basis of the
original material value of 100.00 EUR
KDM = (IR Wert / GR Wert)*
(GR val. in local crcy (with new exch.rate)- WE val. in local crcy
Independent from the subsequently debited quantity (<= stock quantity) and the value of the subsequent debit.
A,B) KDM = (150 / 100)*((100 * 0.8) - (100 * 0.41667)) =
= 80 - 41.67 = 57.50 USD
2. Posting to GR/IR account: 0,00
3. Price difference:
PRD = amount in local currency - KDM - GR/IR entry
A) (100 * 0.8) - 57.50 - 0 = 22.50 USD
B) ( 10 * 0.8) - 57.50 - 0 = 49.50- USD
4. Settlement of price and exchange rate differences:
Different signs?
A) No:
Amounts determined are posted separately:
ExchRDiff. = 57.50 USD
Price diff. = 22.50 USD
USD EUR
Creditor KBS 80.00- 100.00-
Price difference PRD 22.50 100.00
Exch. rate diff. KDM 57.50 0.00
B) Yes:
ABS exchange rate diff. > ABS price diff.:
ExchRDiff = ExchRDiff. + Price diff. = 57.50 + 49.50- = 8 USD
Price diff. = 0.00 USD
USD EUR
Creditor KBS 8.00- 10.00-
Price difference PRD 0.00 10.00
Exch. rate diff. KDM 8.00 0.00
Identical currencies - different amounts?
Currencies:
Transaction currency | 1st local currency | 2nd local currency
USD | MXN | USD
Exchange rate:
MXN / USD = 7.7
Logistics invoice with manual entry of the exchange rate of
MXN / USD = 10.0:
USD | MXN | USD
Creditor 100,00- | 1000,00- | 129,87-
Expense 100,00 | 1000,00 | 129,87
The amounts in transaction currency and 2nd local currency are then different despite the same currency key if the 2nd local currency is calculated on the basis of the 1st local currency due to FI Customizing (OB22) and if you entered a manual exchange rate. If you want to get identical amounts, the base currency must be the document currency/transaction currency.
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