Document Splitting in New GL in SAP #12: Document Splitting and unrealised foreign exchange loss/ gain

Document Splitting in New GL in SAP #12: Document Splitting and unrealised foreign exchange loss/ gain

Overview

In a previous blog, I demonstrated the Document Splitting process for realised foreign exchange gain/ loss. In this blog, I will demonstrate the Document Splitting process for unrealised foreign exchange gain/ loss. Unrealised foreign exchange gain/ loss occurs when a company has an outstanding payable/ receivable in a foreign currency and the value of currency has changed since the debt was recorded. The unrealised foreign exchange gain/ loss will be recorded as a part of the period end process; SAP also creates a reversal document to reverse out the gain/ loss. This process of recording unrealised gain/ loss and reversal continues till the debt is paid/ received and the foreign exchange gain/ loss is realised. SAP ECC newGL Document Splitting process supports certain “subsequent processes whereby the system transfers document splitting characteristics from the original process to the subsequent process.” Users are not required to configure any extended Document Splitting rules to split documents from subsequent processes. If subsequent processes post line item to cost centres, the system ensures that these cost centre relevant line items are split based on the split in the original process. In this blog, I will explain and demonstrate how SAP ECC Document Splitting works for subsequent processes of unrealised exchange rate gain / loss.

 

Blogs on Document Splitting

In my series of blogs on document splitting, I intend to explain and elaborate the concepts behind Document Splitting and highlight using examples how document splitting can be achieved for various complex business processes. I use Profit Centre as a “scenario” to explain the functionalities; however all processes that apply to Profit Centre also apply to the other scenarios (Segment, Business Area).

To identify the series of blog, I have categorised the blogs under SAP > newGL. If you have questions/ comments/ suggestions, please send me your comments in the form below. Sharing your questions and experience using comment box below will help other readers to gain additional knowledge involved in this functionality.

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Assumption for this blog

You should read by first 5 blogs to gain an understanding of the concepts around document splitting. These 5 blogs form the backbone of this blog series. Where possible in this blog, I will link the context to the foundation blog so you can refer back to the concept, if you want to.

Overview of new GL Document Splitting Process
Architecture of SAP new GL
The Design driving the new GL Document Splitting process
SAP delivered pre-configuration for document splitting in SAP new GL
The semantics of SAP new GL document splitting process

The configuration for document splitting characteristics for General Ledger for this blog is as below.

[IMG] Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger

Configuration: GL characteristic for document splitting

Configuration: GL characteristic for document splitting

 

Configuration for CO-relevant document splitting characteristics can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for Controlling

Configuration: CO characteristic for document splitting

 

I will also assume you have configured the GL account default for unrealised foreign exchange loss/ gain.

[IMG] Financial Accounting (New) > Accounts Receivable and Accounts Payable > Business Transactions > Outgoing Payments > Outgoing Payments Global Settings > Define Accounts for Exchange Rate Differences

 

This GL Account is created as an expense cost element.

Unrealised Forex GL as cost element

Unrealised Forex GL as cost element

 

What I am demonstrating

In this blog I will demonstrate Document Splitting in the unrealised foreign exchange loss/ gain process. I will create an outstanding Vendor Invoice from an Australian company for an overseas vendor in US Dollars. I will execute the revaluation of open items in foreign currency program. That program will post unrealised foreign exchange gain/ loss on open items.

 

Unrealised foreign exchange gain/ loss

I posted the following Vendor Invoice from an Australian company in USD. The exchange rate at the time of booking the Vendor Invoice was USD:AUD 1:1.015.

Vendor Invoice in foreign currency

Vendor Invoice in foreign currency

 

This Invoice is outstanding at the end of the month (of Sept 2012). I executed the valuation of open items in the foreign currency program. At the end of the month, the exchange rate has moved to USD:AUD 1:025. The revaluation program valuates the USD 1000 Invoice at AUD 1025. There is a AUD 10 foreign exchange loss. This loss is split between the two cost centers 1322 and 1732 in the ratio of the expense in the original invoice.

Revaluation of open items

Revaluation of open items

 

Variation of above process

If the unrealised foreign exchange gain/ loss account is not set up as a cost element, then the Document Splitting for unrealised foreign exchange gain/loss GL account will occur at the Profit Center level only.

Revaluation of open items (no cost element)

Revaluation of open items (no cost element)

 

Conclusion

The process of Document Splitting on subsequent processes is relatively simple. Document Splitting for certain subsequent processes works automatically in SAP without any extended Document Splitting configuration. SAP picks the split on the original document and uses that as the split basis for the subsequent documents.

 

Please Share

I hope this blog has helped you understand the design behind document splitting of subsequent processes. Please do leave your comments below whether this article was helpful; and whether you have any suggestions/ comments; or if you would like to share your experience with document splitting.

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View my presentation on Slideshare

 

Index of my blogs on Document Splitting in new GL in SAP ECC

Overview of new GL Document Splitting Process
Architecture of SAP new GL
The Design driving the new GL Document Splitting process
SAP delivered pre-configuration for document splitting in SAP new GL
The semantics of SAP new GL document splitting process
Set up Zero-balancing for SAP new GL
Customise Document Splitting rules
Use Constants for Nonassigned Processes in SAP new GL
Customise cross company code postings for document splitting
Document Splitting in Cross company code vendor payment
Document Splitting and realised foreign exchange gain/ loss
Document Splitting and unrealised foreign exchange gain/ loss

 

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Rajesh has implemented new GL and Document Splitting for several customers. Rajesh has 12 years experience implementing SAP / IT / BPM Finance solutions for several customers globally; he also has 7 years experience working in the business in Finance and Accounting functions. His business process knowledge combined with his IT expertise enables him to provide his customers with best-of-breed advice on business process / IT implementations.

View Rajesh Shanbhag's profile on LinkedIn

 

Comments

  1. Hi Rajesh,

    I read the documents splitting blogs and instantly I became a fan of yours, for the simple fact that your bogs were simply and lucid.

    I have one question in this forex revaluation blog.

    In ECC6 the “revaluation journal entry” is passed for each revalued open line item separately OR are open line items of vendor/customer/GL are clubbed based on some criteria for journal posting.

    The reason for asking the above question is that you mentioned in the blog that, revaluation happens based on the earlier document and its document characteristics entered on the original journal entry.

    Thanks
    Anil
    Anil recently posted..Document Splitting in New GL in SAP: Document Splitting and unrealised foreign exchange loss/ gainMy Profile

    • Hi Anil
      What I mean by document characteristics is the profit centre or the other splitting characteristics; these are carried over to the revaluation entry.

      I do not have access to an SAP system right now to confirm your question – I performed this revaluation some time ago – so from memory, I think the system grouped the transactions into a single document based on vendor number. Hence for the same vendor it posts one revaluation document, however it posts several line items one per open line item. The system also posts the reversal document simultaneously.

      Rajesh

  2. I could say very much useful and informative document it is.
    The way of explanation and examples are very much apprehensible.

    Regards,
    Chandu

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