What is 'temporal translation difference' in SAP FI-LC - Consolidation?

temporal translation difference - Overview

• Component: FI-LC

• Component Name: Consolidation

• Description: The fluctuations in exchange rates during the course of time cause the currency translation of the value of a specifc asset to produce different results in a second currency. The difference between these two values is called a temporal translation difference. &EXAMPLE& When translating fixed assets at the current rate, there is a difference because of the swings in exchange rates between the value of the closing balance of year n and the value of the opening balance of year n+1.

temporal translation difference - Details

• 
  Key Concepts: 
  Temporal translation difference is a concept used in the FI-LC Consolidation component of SAP. It is used to calculate the difference between the exchange rate of a currency at the time of a transaction and the exchange rate at the time of consolidation. This difference is then used to adjust the consolidated financial statements. 
  
  How to use it: 
  In order to use temporal translation difference, you must first set up a currency translation type in SAP. This type will determine how the exchange rate differences are calculated and applied. Once this is done, you can enter transactions in different currencies and SAP will automatically calculate the temporal translation difference for each transaction. 
  
  Tips & Tricks: 
  It is important to ensure that the currency translation type you set up is accurate and up-to-date. This will ensure that the temporal translation differences are calculated correctly and that your consolidated financial statements are accurate. 
  
  Related Information: 
  For more information on temporal translation difference, please refer to SAP's documentation on FI-LC Consolidation. Additionally, there are many online resources available that provide detailed explanations of this concept and how it works in SAP.