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diff between legal&profit center valuation

hi'

pls make me know about the 'diff between legal&profit center valuation& where it is used

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  • author's profile photo Former Member
    Former Member
    Posted on Jan 30, 2008 at 01:58 PM

    Hi,

    this is a very big topic and hard to explain in a few sentences. Please read the information on

    http://help.sap.com/saphelp_erp60_sp/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm

    or http://help.sap.com --> Click on your SAP release version --> Financials --> Enterprise Controlling --> Profitcenter Accounting --> Multiple Valuation Approaches/Transfer Prices.

    Read also notes 122008 and 861965.

    Valuation View

    -


    You use valuation views to represent different ways of viewing business transactions in a company. You can look at a business transaction from the following viewpoints:

    Group Valution

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    From a consolidated group viewpoint, a business transaction within the group is reproduced for group cost approaches. This way intercompany profits are eliminated between internal trading partners.

    Profit Center Valuation

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    From a profit center viewpoint, a business transaction between profit centers is reproduced for management approaches (internal prices).

    Individual enterprise

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    From an individual enterprise viewpoint, a business transaction between internal trading partners is reproduced for external prices.

    Managing several valuation methods at the same time for material stocks and goods movements is referred to as parallel valuation.

    Use

    -


    In Profit Center Accounting this field controls whether data is to be managed from a legal view, group view or profit center view.

    - In the legal view goods movements are posted between profit centers at the sales price which was agreed between internal trading partners who produce a balance sheet/profit and loss statement independently.

    - In the group view the goods movements are posted at the group production cost price which is used for clearing within a group without transfer price surcharges.

    - In the profit center view goods movements are posted between profit centers at negotiated transfer prices which are used for internal profit determination and corporate management.

    You can find a detailed description on this topic in the online documentation for Profit Center Accounting.

    Best regards,

    Andreas

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  • author's profile photo Former Member
    Former Member
    Posted on Jan 30, 2008 at 02:28 PM

    Hi,

    Legal valuation- If you sell a product to a group Company, you need to bill them at arm's length. i.e. at market price and book revenue accordingly

    Profit center valuation- You can agree the price among the group Companies and book the revenue accordingly. So it can vary from the legal revenue

    Hope this is clear

    S Jayaram

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