Valuation Methods - foreign currency valuation

[Former Member]

Hello

I am trying to understand the concept of different valuation methods. could you explain using examples please ?

Say for instance, a goods receipt is raised in USD for 100USD on 2 Jan 2009 and local currency is EUR. Exchange rate is 1EUR : 1,5USD. On 4 Jan 2009 invoice received at rate of 1EUR : 1,6USD.

What are the implications of the options lowest value principle, strict lowest value principle, always valuate and revalue for such a transaction?

tks

[Former Member]

Hi Fede

thanks for fast response. can u please give business example?

[Former Member]

Those are different ways of valuating your Foreign Currency Operations depending or the country regulations:

1- Lowest value principle means that the Valuation will be posted only if it is giving a negative result.

2- Strict lowest value principle will be post valuation only if two conditions happened:

A - The valuation is negative

B - The new valuation has a greater devaluation and/or a greater revaluation for credit entries than the previous valuation

3 - Always Valuate: No matter if it is possitive or negative, the valuation will be posted.

4 - Revalue only: The opposite of the first one, valuation is only posted when possitve.

5 -Reset Valuation Run: In this case open items are valuated at the acquisition price. This way the valuation difference is set to zero. This is useful to reset previous valuations

Regards,

Fede