It is a need for many organizations to report financial results based on different/multiple accounting regulations. To instance, European companies must report their consolidated financial results according to International Financial Reporting Standards (IFRS), while US companies must report according to US Generally Accepted Accounting Principles (US GAAP).
It is possible to have one legal reporting perspective while reporting individual company and business transactions of it since commercial and tax laws and regulations. In addition to this legal reporting perspective, companies need reporting perspectives from the point of view of whole group and also single non-legal entity like profit center.
It is common that some companies which are operating in multiple markets with large volume of intercompany and intracompany transactions need to have both legal and management reporting purposes while legal reporting does not include intercompany/intracompany profits, management reporting does. To find out intercompany/intracompany profits, transfer prices which is agreed transactional price between two related entities need to be determined. These entities normally different legal entities but it is possible to have this in SAP with different non-legal entities like profit centers.
SAP has 3 different valuation approaches to value inventory:
The view of individual legal entity shows the transfers of goods and services between independent companies according to legal reporting requirements.
The view of group of legal entities which shows results of exchanged goods and services by eliminating intercompany profits.
The view of non-legal entity (e.g., profit center) which show result of exchanged goods and services between profit centers by using transfer prices. So, difference from group view is showing intercompany/intracompany profits rather that eliminating them.
To understand profit center valuation, it is possible to review example below:
Above posting described will be only displayed in profit center valuation of accounting document. It will have no effect in legal valuation.
Furthermore, let’s say plant Y adds 10 EUR cost to material A and now material A turns to material B and material B is sold with 10 pieces to customer with 40 EUR.
Reporting for multiple valuations can be done from material price analysis report, COPA reports and profit center reporting. In material price analysis and COPA reports, values can be displayed from both legal view and profit center view. In COPA, sales can be reported with profit center values. In material price analysis report, movement and costs can be reported from both cost views.
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