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SAP FI Material Prepared | by Pasha Shaikh
Dilsukhnagar, Hyderabad – 500 060.
SAP FICO
FI Configuration Documents
Reference Material
Prepared by:
Pasha Shaikh Mehboob
# 7-20, 4th Floor, Kamala Landmark, Beside Konark Theatre, Dilsukhnagar,

Hyderabad – 500 060. Telangana State, INDIA.
Ph: 040 – 6625 2272 / 73 / 74, +91 – 93999 74756, +91 – 903 006 1377.
Visit Us @ www.svinfotech.in
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Confidential and Rights owned by Pasha Shaikh
Foreign Currency Balances Revaluation

1) What is meaning Foreign currency valuation? Sfa
Any company is requested to report financial statements in local tax currency of the country,
So for example we have company in India then we have to report the financial statement in INR Local currency, now
let’s assume that we have supplier in US. So whenever we purchase the product from US Suppliers, we have to records
the invoices and Outgoing Payments in USD.
But also at the same we have to records the all these Transactions in INR and this what we called “Foreign
currency Valuation”.
2) Realized Los/Profit?
Let’s assume that today is 15TH January, I am going to purchase some purchase US supplier for 1000 USD,
Now example 1000 USD = 10,000 EGP, (1USD = 10 EGP).
 Now let assume that according to the Agreement with Supplier, I am going to Pay him after 1month e.i..,
15TH FEB I am going pay to the Supplier,
 now Assume that on 15TH Feb the Foreign currency 1USD = 15 So now instead of paying 10,000 EGP to
supplier,
 I actually have to pay 15,000 EGP, so I have loss 500 EGP and this is what we called a realized foreign
currency Difference,
Why it is realized?
Because it is a Actual Loss, we have actually pay to the our Supplier 5000 EGP more that is called Realization.
3) Un-realized Loss/Profit?
 As we agreed the foreign currency rate 15 th of January was 1 USD = 10,000 EGP
 At the End of January as a company we are requested to report the financial Statement and According to
some Financial Standards, We have to report the foreign accounts as if we going to Pay Everything
Today.
So let’s Assume that The End of January the Exchange rate was 1 Used = 12,000 EGP, So in my Financial
statement I am going to report the my Accounts Payable for 1000 USD and 12,000 EGP, So I am going to
Report my accounts Payable for 12,000 against 10,000, so that 2000 Difference amount is an Un-
Realized Foreign currency Differences,
Why it is Un-realized?
Because we have no Pay the two Supplier yet, so we have that Actual Loss any money yet, but it is
Expected Loss.
Types of Procedures:
1) Valuation method
2) Valuation type/Procedure
3) Valuation Area
4) Accounting Principle  Lined to Ledger Group
5) Accounting Principle :
 Linked to the Valuation Area
 Valuation area  Valuation Method  It specify valuation type / Procedure
2
 Valuation area Linked to Accounting Principles (IAS, US GAP, IFRS)

 For Other Linked to ledger Group  Linked to Ledger  Update in to postings
i) Valuation Method :
It specifies which method or procedure is used to valuate the foreign currency open items
and also to value the G/L Account balance which is maintain the foreign currency.
Valuation Method it contains Types of Valuation Procedure:
 Always Valuate
 Lowest value principle
 Strict lowest Value Principle
 Revalue Only
1) Always Valuate:
Whatever case system it will generate Entries Either Gain / Loss.
2) Lowest Value Principle (only loss case)
System it will valuate only in case of Loss on revaluation of foreign Currency.
3) Revaluate only (only in case of Gain):
System it will valuate only in case of Gain. Other cases it won’t allow.
4) Strict Lowest value Principle (In case of more loss) :
When we compare with the earlier valuation, greater Devaluation (compare with Previous Loss)
then we use this.
 Post per line item :
It you select this each invoice line item wise you can get for valuation more documents
will be created.
We won’t get overflow of line items
If you not select this one, the entry it will be generate summarization wise.
 Document types:
It Represent during the posting of revaluation of entry. Which doc type you need to be use.
 Exchange rate type for Debit Balance:
Which exchange rate type you need to be use for revaluation of the foreign currency, if we
not specify by Default it selects “M”.
 Minimum Differences:
Below this difference you are not take for controlling purpose it will use it’s not mandatory.
 Valuation Area:
It represents the valuation method.
2 proposes we can use Valuation Area.
1) By using this we can do more valuation Methods.
2) We can post Different G/L Accounts and Post Different Ledgers (leading and Non Leading
ledger)
* One Valuation It represent one valuation Method.
* same Valuation Method we can link to Multiple valuation Areas
 Accounting Principle :
 it represents the legal authorities (or) Statutory Authorities
Ex: IAS, US-GAP, IFRS
 Accounting Principle you linked to the valuation area. That means
accounting principle it represents the valuation Area.
 One accounting principle you can linked to the multiple valuation areas
 One Valuation area it represents only one accounting Principle
 The accounting Principle it is linked to the ledger groups
3
 One ledger group can be linked to multiple accounting Principles.

 Ledger group it represents the ledgers (Leading (or) Non leading).
 ds
1) Creation of 3 GL Masters
a. Loss : Realize Exchange rate Loss (440041)
b. Gain : Realize Exchange rate Gain (330031)
c. Val. Loss1 : Un-Realize Exchange rate Loss (440042)
d. Val. Gain1 : Un-Realize Exchange rate Gain (330032)
e. Bal.sheet adj : Payable Foreign Adjustment (Provision for FCR)- 110001
Note: (don’t take Open item management &
reconciliation for Bal.sheet adj)
a) “Realize Exchange Rate Loss A/c”
G/L Account 440041 copy with 400100

Types/Description (Tab)
Short Text Realizd Ex Rate Loss
G/L Acct Long Text Realize Exchange rate Loss
b) “ Un- Realize Exchange Rate Gain A/c”

Short Text Un-Relz Ex Rate Loss
G/L Acct Long Text UN-Realize Exchange rate Loss
C) “Realize Exchange Rate Gain A/c”
Short Text Un-Relz Ex Rate Loss
G/L Acct Long Text UN-Realize Exchange rate Loss
D) Un-Realize Exchange Rate Gain A/c
Short Text Un-Relz Ex Rate Gain
G/L Acct Long Text n-Realize Exchange rate Gain
E) Payable Foreign Adjustment(Provision for FCR)- 110001
Short Text Payble Foregn Adjest
G/L Acct Long Text Payable Foreign Adjustment
Note : Don’t need to select “Open item Management “ check box
Don’t need to select any Reconciliation type.
2) Define Valuation Methods: (S_AL0_19000081)
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Note: Because we have to do the valuation Configuration for G/L Transaction and also open item that means
customer, Vendor transaction.
SPROFinancial Accounting (New) GL A/c (NewPeriodic Processing Valuate Define Valuating
Methods.
a) Valuation Method for G/L Transaction:

New Entries (F5)
↓
Valuation method T10
Description G/L Account Balance Valuation
Valuation Procedure:
Always Evalute Balance Valut.
Post per Line Item
Document Type [SA]
Exchange Rate Determination
ExchRate Type for Debit Ba : M
ExchRate Type for CreditBal : M
Determine Exch. Rate Type from Acct Bal.
↓
b) Valuation Method Open Item for Customer & Vendor Transaction
Click on “Next Entry” (F8)

↓
Valuation method T20
Description Customer & Vendor Open Item Valuation
Valuation Procedure:
Always Evalute
Post per Line Item
Document Type SA
Exchange Rate Determination
ExchRate Type for Debit Ba : M
ExchRate Type for CreditBal : M
Exch.rate type from Invoice reference
↓
Save (Enter into in your Request)
3) Define Valuation Areas (S_AL0_19000080)

Same Path  Click on Next IMG (Define Valuation Areas) Button.
New Entries (F5)

↓
Valu. Valuation
Crcy type Long Text
Area Method
T1 T10 10 Company code currency (Select from F4) G/L Account Balance Valuation
T2 T20 10 Company code currency (Select from F4) Customer & Vendor Open Item Valuation
↓
Save (Enter to save in your request)
4) Define Accounting Principles (S_ALN_01000236)
5
SPROFinancial Accounting (New) Financial A/c Global Settings (New) LedgersParallel Accounting
Define Accounting Principles
New Entries (F5)
↓
Accounting Principle Name/Description of Accounting Principle
IN Indian Accounting Standard
US US Accounting Principle
↓
Enter & Save (Enter into in your own request)
5) Assign Accounting Principles to Ledger Groups: (S_PL0_86000070)
Path: Same path up to Parallel Accounting  Click on Next IMG Button.
New Entries (F5)
↓
Accounting Principle Target ledger Group Description
IN 0L Leading Ledger
US T4 Non Leading_US
0L for Indian Accounting Standards (By default all Indian Companies
↓
Press Enter & Save
6) Assign Valuation Areas & Accounting Principles (S_PL0_86000071)

Same path  Click on Next IMG Button
New Entries (F5)

↓
Valuation Area Acc.Princ
T1 IN
T2 IN
7) Prepare Automatic Posting for Foreign Currency Valuation (OBA1)

This settings are common for foreign currency valuation & also Default account for Realized Exchange
rate Difference , Clients can use only these Two.
(1) KDB
(2) KDF
KDB : It you want to use exchange rate difference key, only for G/L Account then we use KDB
Transaction.
KDF :
This transaction is used for both exchange rate differences open items & also G/L Accounts.
The KDF can be used for both foreign currency valuation and also to account the realized
exchange rate differences.
Need to remember at the time OBA1:
 A/P Recon G/L Account
 A/R Recon G/L Account
 Advance Paid to Vendor G/L Account.
 Bank G/L Accounts (Which is operating in Foreign Currency)
G/L Account :
It represents like A/P, A/R, Adv Received, Adv paid Bank G/L Accounts.
Currency :
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Leave as Blank. If you specify INR. It is only applicable for INR Currency.
Valuation :
The Valuation Fields reference for Default G/L Account for Revaluation of foreign currency
Differences.
Valuation Loss1:
It represents un realized loss for foreign currency revolution.
Valuation Gain 1:
It represents the Un realized gain for foreign currency Revaluation.
Balance Sheet Adjustment 1:
It represents the provisional G/L Account for foreign currency revaluation.
Exchange rate difference Realized:
It represents the realized Exchange rate Differences.
 Loss : It represents the Realized Loss
 Gain: It represents the realized gain.
Realised Exchange rate Diff:

(1) Gain on realized Exchange rate Diff
(2) Loss on realized exchange rate difference
FCR (Un realized exchange rate difference:
(1) Gain on unrealized exchange rate Differ
(2) Loss on Un realized Exchange rate Difference.
(3) Provisional G/L Account for Foreign Currency Revaluation.
SPROFinancial Accounting (New) GL A/c (New) Periodic ProcessingValuateForeign Currency
Valuation Prepare Automatic Posting for Foreign.
(a) G/L Mapping for Foreign Currency for G/L Accounts

Double Click on “KDB”
↓
Click on “Change Valuation Area(F7)”
↓
Valuation Area (T1)
↓
Ex.Rate Diff.Key Expenses A/c E/R Gains Account
(Exchange Loss)
440041 330031
↓
Save (Enter Save ) & Close Session
(b) G/L Mapping for

↓
Foreign
Double Click on “KDF” (Exchange Rate Dif.: Open Items/GL Acct)
Currency for
↓
Open Item
COA : TA01 & Press Enter
Management
↓
(OBA1)
New Entries (F5)
G/L Account 100700
Currency
(a)
Exchange rate difference realized G/L Mapping for
Loss 440042 (Un-realized-Loss) FCV: For
Gain 330032 (Un- realized Gain)
Bal.sheet adj.1 110001 (Payable adj)
Exchange rate difference realized
Loss
7 440041 (Realized-Loss)
Gain 330031 (Realized –Gain)
↓
Save
OBA1
Double Click on “KDF” (Exchange Rate Dif.: Open Items/GL Acct)
↓
COA : TA01 & Press Enter
↓
New Entries (F5)
G/L Account 100700
Currency
Loss 440042 (Un-realized-Loss)
Gain 330032 (Un- realized Gain)
Bal.sheet adj.1 110001 (Payable adj)
Loss 440041 (Realized-Loss)
Gain 330031 (Realized –Gain)
↓
Save
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UNIT TESTING
Realized Exchnage rate Diffrence Gain/ Loss:-
Realized forex gain/loss arises when you do the clearings and do the payments. This differences arise only when while
clearing the items.(F-28, F-53, F-32, F-44 & F-03). This can't be reversed like unrealized gain/loss
OR
When the foreign currency transaction has actually completed and you have gained/losses due to that transaction is
called as realized gain/loss.
For example you have purchased the goods on 01 FEB, 2021 for 500 USD with 70 Exchange rate (35,000 INR) on credit.
Now on 15.02.2021, you paid the invoice by paying 500 USD and clear it off. But on 15.02.2021, the exchange rate
between INR: USD came down to 65. So you gained by amount 2500 INR (35,000 -32500) (500 *65 =32500). This is the
realized gain when you clear of the invoice against the payment.
Un-Realized Exchange rate Difference Gain/ Loss:-
Unrealized forex gain/loss arises on only open items through foreign currency valuation program (FAGL_FC_VAL).
These are posted at each month end and reversed on next month first date because these are unrealized gains/losses.
OR
Here the foreign exchange rate difference appear but not realized, because the transaction is not cleared up.
Taking the scenario above, if you do not pay on 15.02.2021 and invoice remains open. You run the “FAGL_FC_VAL” at
month end to reevaluate the open items and on 28.02.2021, the exchange rate came down at 75 INR per USD. Then
“FAGL_FC_VAL” will show the unrealized loss of 2500 INR (37500 -35000).
1) Maintain Exchange Rate (OB08)

OB08
↓
↓
Enter & Save
UN- Realized Loss/ Gain

4) Un-realized Loss/Profit?
 As we agreed the foreign currency rate 15 th of January was 1 USD = 10,000 EGP
 At the End of January as a company we are requested to report the financial Statement and According to
some Financial Standards, We have to report the foreign accounts as of we going to Pay Everything
Today.
So let’s Assume that The End of January the Exchange rate was 1 Used = 12,000 EGP, So in my Financial
statement I am going to report the my Accounts Payable for 1000 USD and 12,000 EGP, So I am going to
Report my accounts Payable for 12,000 against 10,000, so that 2000 Difference amount is an Un-
Realized Foreign currency Differences,
Why it is Un-realized?
9
Because we have no Pay the two Supplier yet, so we have that Actual Loss any money yet, but it is
Expected Loss.
Process in SAP
2) Posting Vendor Invoice (F-43)
3) Run FCV Before Payment (FAGL_FC_VAL)
If you Run FCV Before payment then Un-Realized Loss/ gain will take place.
This T.ocde we use form the ECC 5 for New G/L Account F.05, This T.code we using before ECCT New
G/L.
Maintain Exchange Rate (OB08):
Note:
 Actual Payment is next month 05 i.e.., 05.03.2021, but Finance close the Feb Month for
Auditing / close book.
 The time Finance will do FCV for Un-Realized Gain/Loss.
10
F8
Now whatever New Different, SAP is going to post different 2000 into Our Accounts Payable.
Click on “Posting”
Note: And this Transaction going to be Reversing the next Month
11
So other entry posted SAP The Same Entry but Revers
UPDATE-RUN
F8
Click on Messages
12
Un-Realized Loss:
Un-Realized Loss Reverse Entry:
13
Realized Loss/ Gain

4) Vendor Outgoing Payment (F-53) on next month 05.03.2021
Note :
Un-Realized Loss/Gain:
Unrealized forex gain/loss arises on only open items through foreign currency valuation program (FAGL_FC_VAL).
These are posted at each month end and reversed on next month first date because these are unrealized gains/losses.
Realized Gain /Loss:
Realized forex gain/loss arises when you do the clearings and do the payments. This differences arise only when while
clearing the items.(F-28, F-53, F-32, F-44 & F-03). This can't be reversed like unrealized gain/loss
14
End of Foreign Currency Balances Revaluation
15
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SAP FI Material Prepared | by Pasha Shaikh

Dilsukhnagar, Hyderabad – 500 060.

# 7-20, 4th Floor, Kamala Landmark, Beside Konark Theatre, Dilsukhnagar,

Foreign Currency Balances Revaluation

Now example 1000 USD = 10,000 EGP, (1USD = 10 EGP).

 Valuation area Linked to Accounting Principles (IAS, US GAP, IFRS)

 One ledger group can be linked to multiple accounting Principles.

G/L Account 440041 copy with 400100

b) “ Un- Realize Exchange Rate Gain A/c”

2) Define Valuation Methods: (S_AL0_19000081)

a) Valuation Method for G/L Transaction:

b) Valuation Method Open Item for Customer & Vendor Transaction

Click on “Next Entry” (F8)

3) Define Valuation Areas (S_AL0_19000080)

New Entries (F5)

4) Define Accounting Principles (S_ALN_01000236)

6) Assign Valuation Areas & Accounting Principles (S_PL0_86000071)

New Entries (F5)

7) Prepare Automatic Posting for Foreign Currency Valuation (OBA1)

Realised Exchange rate Diff:

(a) G/L Mapping for Foreign Currency for G/L Accounts

(b) G/L Mapping for

Un-Realized Exchange rate Difference Gain/ Loss:-

1) Maintain Exchange Rate (OB08)

UN- Realized Loss/ Gain

2) Posting Vendor Invoice (F-43)

3) Run FCV Before Payment (FAGL_FC_VAL)

Maintain Exchange Rate (OB08):

Note: And this Transaction going to be Reversing the next Month

So other entry posted SAP The Same Entry but Revers

Un-Realized Loss Reverse Entry:

Realized Loss/ Gain

Realized Gain /Loss:

End of Foreign Currency Balances Revaluation

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