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Posted on October 24, 2018 under Nakisa SLAN, SAP for Beginners

Written by:
Ragini Raj
SAP Business Analyst
rraj@comerit.com

 

An Introduction to Parallel Currencies

Parallel currencies are the currencies that are issued by the state as an official second currency alongside legal tender currency, and can also be designated as legal tender. A parallel currency can be a stable, hard currency (e.g. A foreign currency) that is used alongside a weak, national currency in order to combat hyperinflation in the national currency. On the other hand, a weak national currency can be used as a parallel currency in order to stimulate the national economy and to make the export economy more competitive.

Parallel currencies are the additional currencies to each GL transaction that maintain the transaction value in a different currency, parallel with the document currency and local currency value.

 

Parallel Currencies in Asset Accounting

Let's focus specifically on the 'why' and 'how' of using parallel currencies in the SAP Lease Accounting (SLAN) module.

In Financial Accounting, apart from the local currency, you can define up to two additional currencies for your company code. This means that your ledgers are managed in these parallel currencies, and the currencies can work in foreign business transactions.

We can use various types as parallel currencies:

  • Company code Currency: You enter the currency key of the company code on the company code. You are required to manage a company code currency in all company codes.
  • Group Currency: You define the group currency when you define your client
  • Global Company Currency: You define the global currency when you define the company assigned to your company code
  • Hard Currency: You define the hard currency when you define the country assigned to your company code
  • Index- Based Currency: You define the index-based currency when you define the country to which your country code is assigned.

If we manage our ledgers in Parallel currencies, it will have the following effects:

  • During postings the amounts are also saved in Parallel currency
  • Transaction figures for the G/L account are also updated in parallel currencies
  • Exchange rate differences also arise in the parallel currencies
  • You can also perform a foreign currency valuation in the parallel currencies

Tip: If a company has a foreign partner who wants to report in foreign currency, the company will have to post transactions in both their currency and the currency of the country where the partner is located.

 

  1. Defining Currencies for leading ledger:

You can use Transaction Code (OB22) or SPRO → Financial Accounting (NEW) → Financial Accounting Global settings → Ledgers → Ledger → Define currencies for Leading Ledger

Here we define additional currencies that we want to use apart from the local currency. For the 1st local currency, we give the Company Code Currency (In our case we have specified CAD as our local currency). For the 2nd local currency, we have given Group currency (In our case it is USD).

When you have two currencies defined, your SLAN dashboard will reflect that:

Parallel Currency_1

 

While in SLAN, we specify the Company Code Currency and Group Currency in the 'Currency Type' field. For our case:

  • Currency Type 10 (CAD) = Company Code Currency
  • Currency Type 30 (USD) = Group Currency

 
When we have three currencies defined, the SLAN dashboard appears as such:

 Parallel Currency_2

 

While in SLAN, we specify the Company Code Currency and Group Currency in the 'Currency Type' field. For our case:

  • Currency Type 10 (CAD) = Company Code Currency
  • Currency Type 30 (USD) = Group Currency

Master Data Configuration → System Configuration → System → Company → Accounting Setup → Exchange Rate Type

When we have two currencies defined, we see:

 Parallel Currency_3

 

And when there are three currencies defined:

 Parallel Currency_4

 

  1. Define Depreciation Areas:

Follow these steps in order to define depreciation areas:

SPRO → Financial Accounting (NEW) → Asset Accounting → Valuation → Depreciation Areas → Define Depreciation Areas

 

Parallel Currency_5

 

  1. Define Depreciation Area for Parallel currency:

 Follow these steps to define the depreciation area:

Master Data Configuration → System Configuration → System → Module Management

Parallel Currency_6

 

Here we see that 'EnableParallelCurrency' is checked, which means that we can add two more currencies apart from local currency.

 

Parallel Currency_7

 

  1. Define Depreciation Area for Foreign Currency: (OAYH)

Follow these steps to define the depreciation area:

SPRO → Financial Accounting (NEW) → Asset accounting → Currencies → Define Depreciation areas for Foreign Currencies

 Parallel Currency_8

 

Then, continue with these steps:

Master Data Configuration → System Config → System → Company → Depreciation Area Currency

Parallel Currency_9

 

  1. Determine Depreciation Areas in Asset Class: (OAYZ)

Follow these steps to determine depreciation areas:

Master Data Config → System Config → System → Company → Asset Setup → Asset Class → Depreciation Area

We need to define the Depreciation Area for all Asset class. In our case DepreciationAreaId is 01(Book Depreciation in Local Currency) and 32(Book Depreciation in Group Currency).

Parallel Currency_10

 

References:

https://monneta.org/en/parallel-currencies/

https://archive.sap.com/discussions/thread/1480533

 

 

 

Oct 24, 2018 10:14:34 AM / by Ragini Raj

Ragini Raj

Written by Ragini Raj

Ragini is a SAP Business Analyst on the Comerit team, and has recently begun performing hands-on work with SAP's lease administration platform (SLAN). She is also currently pursuing her Masters degree in Information Technology and Management at the University of Texas (Dallas), where she is specializing in Business Intelligence and Data Analytics.

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