Skip to Content
author's profile photo Former Member
Former Member

IFRS / FASB 52 - VALUATION

Dear SAPians,

FAS 52 Compliance:

1. All the monetary items needs to be valuated on the spot rate.

This means Spot rate on the date of transaction occurrence with that of the spot rate on the month end.

2. WIP,CTC, etc.. should be valued on the Spot rate only.

means result analysis output should be based on the Spot rate on the date of transaction occurrence.

Plz find the specific questions,

Solution in case of

1. In cases of the Projects

2. Incase of Products (MTO and MTS scenario).

With respect to the different RA scenarios of

A. CCM method.

B. Revenue based POC method.

C. Cost based POC method.

So, now the consultants should provide the solution in a way

1. At what rates the Planning will happen - At hedged rates or At Average'M' rates.

2. At what rates the Actual values are captured - At hedged rates or At Average rates

3. How the Result analysis is being carried out whether at hedged figures or at average figures

Thanks & Regards

M N Gurram

Add a comment
10|10000 characters needed characters exceeded

Assigned Tags

Related questions

2 Answers

  • author's profile photo Former Member
    Former Member
    Posted on May 21, 2009 at 03:19 PM

    Hi,

    In case of Products FAS 52 is not applicable.IAS 2 is relevant here.

    You should valuate at cost or market price which ever is less.This is applicable for WIP [RA],FG and Raw Materials.If your inventory is valuated at foreign currency,then you should use spot rate as on the date of Balance sheet for ascertaining the actual cost,not at M.

    The actual rates are captured at M at the transaction level-not while valuating.

    RA is valued at depending upon which is low-hedged or spot as at the date of B/sheet.

    The planning happens at M as you will not know the actual rate of exchange -as on the date of B/sheet-while planning.

    My 2 cents.

    Regards

    Ramesh

    Add a comment
    10|10000 characters needed characters exceeded

  • author's profile photo Former Member
    Former Member
    Posted on Nov 10, 2009 at 03:15 PM

    Dear N M,

    The solution of how FASB52 is applied to the income statement seems not to be covered neither by the literature nor the SAP world... at least this is my knowledge.

    As for the cost to cost POC method the riddle is how to solve the preferred view of a controller (having the sales order under control) and the correct accounting treatment of FASB52, i.e. post the revenue and costs at daily rates.

    I actually see two possibilities (cost side of POC orders):

    a) you post all the costs in a POC cost to cost order at daily rates and adjust the plan value accordingly to avoid any impact on the POC revenue calculated (also to avoid, that you will have more revenue than actually planned)

    b) you only post at hedged rates into the POC cost to cost order and solve the impact to the income statement with an add-on report checking for all cost postings to the IS in fx. Subsequently you would revalue those postings at daily rates

    Unfortunately I am not aware of any SAP standard to apply FASB52 to the income statement. SAP just concentrates on the revaluation of balance sheet items, which is actually the very simple part of the challenge.

    For the revenue of POC cost to cost orders denominated in FX you have again the two options mentioned above

    a) you post the calculated revenue by using the spot rate rather than the hedge rate (problem: PS and SD are only in home currency displayed...) and tell your SAP system to automatically adjust the plan value of the revenue accordingly to avoid revenue overrun of actual versus plan. Unfortunately this has an unfavourable impact on your margin in the order...

    b) You check again the postings in the IS and calculate the corrections

    Knowing the issue for more than 10 years I am still looking for a good practical solution. Any ideas from your side?

    regards

    DAEMLO

    Add a comment
    10|10000 characters needed characters exceeded

Before answering

You should only submit an answer when you are proposing a solution to the poster's problem. If you want the poster to clarify the question or provide more information, please leave a comment instead, requesting additional details. When answering, please include specifics, such as step-by-step instructions, context for the solution, and links to useful resources. Also, please make sure that you answer complies with our Rules of Engagement.
You must be Logged in to submit an answer.

Up to 10 attachments (including images) can be used with a maximum of 1.0 MB each and 10.5 MB total.