How LN handles purchase order/schedule rates

Because IFRS requires that all relevant costs be reflected in inventory, the purchase of goods must be valued against the rate at which the goods were purchased or paid. This applies to all actual costing valuation methods, including the FTP valuation method.

Financial transactions created by purchase orders or schedules that impact invoice accrual ( Accounts Payable), are posted with purchase order/schedule rate data for both the debit and the credit side of the transaction. This applies when the rate determiner of the purchase order is set to Fixed or Manually Entered. Otherwise, the interim account of the financial transaction is posted with the exchange rate type of the purchase order. LN uses the exchange rate type to retrieve the rate data that was valid on the transaction date.

Important!

To have LN take the purchase rate into account, ensure that in the Buy-from Business Partner (tccom4120s000) session, on the Pricing tab, the Use Purchase Rates for Receipts check box is selected. As a result, the corresponding check box will also be selected in the following sessions:

Purchase Orders (tdpur4100m000)
Purchase Schedules (tdpur3110m000)

The Use Purchase Rates for Receipts setting applies to various purchase order and purchase schedule integration document types.

The interim account of these integration document types is (partially) booked against purchase order rate data. Which rate data LN uses, depends on the rate determiner.

Rate Determiner	LN uses the...
	rate type	rate date	rate	rate factor
Fixed, Fixed Local, Fixed Hard, Fixed Local and Hard, Manually Entered		...from the purchase order

Receipt Date, Expected Cash Date	...from the purchase order	...from the actual transaction date	...from the Currency Rates (tcmcs0108m000) session

The rates defined on the purchase order that apply to the accrual side of the transaction (order currency and financial company purchase office) are used for the interim account of the transaction as well. In a multicompany environment, the financial company of the interim account can be different from the financial company of the purchase office. As a result, the rates on the purchase order cannot be directly used: the fixed or manually entered rates must first be converted.

If the currency rate is fixed or manually entered on the purchase order header, the currency system determines the currencies between which the fixed or manually entered rate is defined, and how the rate can be used for the interim account of the transaction.

Currency System	Fixed or manually entered rate defined between the purchase order currency and...
Standard	...the local currency of the purchase office. Because the local currencies can be different in the various financial companies, the fixed or manually entered rate on the purchase order cannot be directly used, but must be converted first. LN calculates a new rate between the transaction currency and the local currency of the ‘to’ financial company via the fixed or manually entered rate from the transaction currency to the local currency of the ‘from’ financial company.
Single	...the local currency of the purchase office. Because the local currency is equal in all financial companies, the purchase order rate and rate factor can be directly used for the interim account of the transaction as well.
Dependent	...the reference currency of the purchase office. The rates from the reference currency to the other home currencies are disabled and retrieved from the Currency Rates (tcmcs0108m000) session on order date.
Independent	...all home currencies. Because the home currencies are equal and have the same position in all financial companies, the purchase order rate and rate factor can be directly used for the interim account of the transaction as well.