What is currency translation difference in SAP EC-CS - Consolidation?

SAP Term: currency translation difference

• Component: EC-CS

• Component Name: Consolidation

• Description: The difference resulting from currency translation for any of the following reasons: Changes to the currency's exchange rate over the course of time, for example between two balance sheet report dates The use of different exchange rates for various balance sheet items and income statement items, for example: the historical rate for investments and investee equity the current rate for the remaining balance sheet and income statement items the average rate for revenue and expense items the current rate for appropriations of retained earnings Currency translation differences must be taken into account in translated financial statements - otherwise the balance sheet will not be balanced. Currency translation differences can be posted with or without an effect on net income, depending on which differential items you choose.

Smart SAP Assistant

• Key Concepts: 
  Currency translation difference is a term used in the EC-CS Consolidation component of SAP. It is the difference between the amount of a foreign currency asset or liability that is translated into the functional currency of the company and the amount of the same asset or liability that was translated into the same functional currency in a previous period. 
  
  How to use it: 
  Currency translation differences are used to adjust the balance sheet of a company when it has assets or liabilities denominated in foreign currencies. The differences are calculated by taking the current exchange rate and subtracting it from the exchange rate used in the previous period. The resulting difference is then added to or subtracted from the balance sheet. 
  
  Tips & Tricks: 
  When calculating currency translation differences, it is important to ensure that all exchange rates used are up-to-date and accurate. This will ensure that any differences are accurately reflected in the balance sheet. 
  
  Related Information: 
  Currency translation differences are closely related to foreign currency gains and losses, which are also calculated using exchange rate differences. Foreign currency gains and losses are recorded in the income statement, while currency translation differences are recorded in the balance sheet.