Simple Example for understanding Realized Forex Gain/Loss

In this document, I have tried to present an example to understand Realized Foreign Exchange Gain/Loss and related postings in SAP in simple terms. Please note that Forex Revaluation which is a Month End Process is a slightly different concept than presented here. The concept below works when we clear Customer/Vendor/G/L line items which results in Actual Foreign Exchange Gain/Loss.

Configuration in OB22 for Parallel Currencies

As per the settings above

• Translation to Local Currency is as per Translation Date and taking Transaction currency as basis
• Translation to Group Currency is as per Translation Date and taking First Local currency as basis

Customer Document Posted

Customer Document Clearing Posted

A difference of 0.30 CAD (Local Currency) was debited as Forex Loss and 1.56 USD (Group Currency/Local Currency2) was credited as Forex Gain

To understand the posting, we need to look at the OB09 settings of the Recon Account for the customer, OB08 rates on the Customer document posting date and Clearing document posting date and calculate the Realized Gain/Loss

Recon Account of the Customer: 11000

Forex Gain/Loss calculation in Local Currency

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Document Currency = CNY

Local Currency = CAD

Exchange rate type ‘M’ is to be used for translation as per OB22 settings and the Translation is to happen from Transaction Currency

USD is the intermediary currency for exchange rate type ‘M’. So, translation from CNY to CAD will be calculated using CNY-USD and CAD-USD exchange rates from OB08 as on the Customer document posting date and Clearing document posting date

Customer Document Posting Date : 10^th Feb 2016

Clearing Document Posting Date : 20^th Feb 2016

OB08 Rates

Customer Document Clearing Posted

Customer Line item Amount in CAD (from Customer Document Posted)

=Amount in CNY * (CNY-USD rate as on 02/10/2016) / (CAD-USD rate as on 02/10/2016)

= 1250 CNY * 0.15209 / 0.71929

= 264.31

Clearing Line item Amount in CAD (from Clearing Document Posted)

=Amount in CNY * (CNY-USD rate as on 02/20/2016) / (CAD-USD rate as on 02/20/2016)

= 1250 CNY * 0.15335 / 0.72605

= 264.01

Hence, Forex Loss in Local Currency = 264.01-264.31 = 0.30 CAD posted to Account 81160 as per the setting below.

OB09 settings for Currency Type 10 (Local Currency) and Recon Account 11000

Forex Gain/Loss calculation in Group Currency (Local Currency2)

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Document Currency = CNY

Local Currency = CAD

Group Currency (Local Currency2) = USD

Exchange rate type ‘M’ is to be used for translation as per OB22 settings and the Translation is to happen from Local Currency

USD is the intermediary currency for exchange rate type ‘M’. So, translation from CAD to USD will be calculated using CAD-USD exchange rate from OB08 as on the Customer document posting date and Clearing document posting date

Customer Document Posting Date : 10^th Feb 2016

Clearing Document Posting Date : 20^th Feb 2016

OB08 Rates

Customer Document Clearing Posted

Customer Line item Amount in USD (from Customer Document Posted)

=Amount in CAD * (CAD-USD rate as on 02/10/2016)

= 264.31 CAD * 0.71929

= 190.12

Clearing Line item Amount in USD (from Clearing Document Posted)

=Amount in CAD * (CAD-USD rate as on 02/20/2016)

= 246.01 CAD * 0.72605

= 191.68

Hence, Forex Gain in Group Currency (Local Currency2) = 191.68 – 190.12 = 1.56 USD posted to Account 81160 as per the setting below.

OB09 settings for Currency Type 30 (Group Currency) and Recon Account 11000