What is temporal method of currency translation in SAP EC-CS - Consolidation?

SAP Term: temporal method of currency translation

• Component: EC-CS

• Component Name: Consolidation

• Description: A currency translation method, according to which balance sheet items are translated using the exchange rates that correspond to their valuation base in local currency: Historical rates for acquisition and production costs Current rate for daily values including receivables and payables The temporal method applies the "single legal entity" theory to currency translation. It assumes that the consolidation group represents a single economic unit, and that its consolidation units post data and prepare balances in the currency of the upper unit, regardless of their country of operation. Currency translation must not affect the valuation base of the balance sheet items or the temporal consideration of revenue and expense. It entails changing the unit of measure, but not the bases of valuation and the preparation of balance sheets.

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• Key Concepts: 
  Temporal method of currency translation is a method used in the EC-CS Consolidation component of SAP to convert financial data from one currency to another. This method uses the exchange rate that was valid at the time of the transaction to convert the data. This ensures that the converted data is accurate and up-to-date. 
  
  How to use it: 
  The temporal method of currency translation can be used in the EC-CS Consolidation component of SAP. To use this method, you must first select the currency you want to convert from and then select the currency you want to convert to. Once these selections have been made, you can enter the exchange rate that was valid at the time of the transaction and then click “convert”. The data will then be converted using this exchange rate. 
  
  Tips & Tricks: 
  When using the temporal method of currency translation, it is important to make sure that you are using the correct exchange rate for the time of the transaction. If you use an incorrect exchange rate, your data may not be accurate. Additionally, it is important to remember that this method only works for transactions that have already occurred; it cannot be used for future transactions. 
  
  Related Information: 
  For more information on how to use the temporal method of currency translation in SAP, please refer to SAP’s official documentation on EC-CS Consolidation. Additionally, there are many online tutorials and videos available that can help you understand how to use this feature in SAP.