What is currency translation in SAP FI-LC - Consolidation?

SAP Term: currency translation

• Component: FI-LC

• Component Name: Consolidation

• Description: The corporate groups must prepare their consolidated financial statements in group currency. Before foreign companies units in EC-CS/SEM-BCS can be included in consolidation for the group, their individual financial statements must be translated from local into group currency. The following choices influence the results of translation: Translation methods - Choice between the balance sheet spot or current exchange rate and the historical rate for the translation of individual financial statement items. Handling of translation differences - Choice between the different alternatives for dealing with differences resulting from translation. Exchange rates - Choice between various exchange rates.

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• Key Concepts: 
  Currency translation is a process used in SAP FI-LC Consolidation to convert the financial statements of a company from one currency to another. This process is necessary when a company has subsidiaries in different countries that use different currencies. The currency translation process involves converting the financial statements of each subsidiary into the parent company’s currency, so that the consolidated financial statements can be prepared in the parent company’s currency. 
  
  How to use it: 
  In SAP FI-LC Consolidation, currency translation is done by using the Currency Translation (CT) function. This function allows users to select the source and target currencies, as well as the exchange rate type and exchange rate date. Once these parameters are set, the system will automatically convert all of the financial statements into the target currency. 
  
  Tips & Tricks: 
  When using the Currency Translation (CT) function, it is important to ensure that the exchange rate type and exchange rate date are set correctly. This will ensure that the correct exchange rate is used for each transaction, and that all of the financial statements are converted accurately. 
  
  Related Information: 
  For more information on how to use the Currency Translation (CT) function in SAP FI-LC Consolidation, please refer to SAP Help documentation. Additionally, there are many online tutorials available that provide step-by-step instructions on how to use this feature.