What is valuation method in SAP FI - Financial Accounting?

SAP Term: valuation method

• Component: FI

• Component Name: Financial Accounting

• Description: A method that determines how foreign currency valuation is performed during closing for example based on the lowest value principle. The method can be used for multiple charts of accounts.

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• Key Concepts: 
  Valuation method is a feature of SAP Financial Accounting (FI) that allows users to determine the value of an asset or liability. It is used to calculate the value of an asset or liability at a given point in time. This value is then used to determine the financial position of the company. 
  
  How to use it: 
  Valuation method can be used in SAP FI to calculate the value of an asset or liability. The user can select from a variety of methods, such as historical cost, current cost, and fair value. The user can also specify the currency in which the valuation should be done. Once the valuation method is selected, the user can enter the relevant data and SAP FI will calculate the value of the asset or liability. 
  
  Tips & Tricks: 
  When selecting a valuation method, it is important to consider the purpose of the calculation and the accuracy required. For example, if a company needs to calculate its financial position accurately, then it should use a more accurate valuation method such as fair value. 
  
  Related Information: 
  SAP FI also provides other features related to valuation methods, such as depreciation and amortization. These features allow users to calculate the depreciation or amortization of an asset over time. This information can then be used to determine the financial position of a company at any given point in time.