Understanding the SAP Parallel Valuation Function

  • by Kurt Goldsmith, Senior Business Consultant, Enowa Consulting
  • September 15, 2002
Learn how you can use this not-well-understood function to allow a single goods movement of a single material to trigger multiple and simultaneous postings to the G/L.

This article offers a simple explanation of a confusing functionality called "Parallel Valuation," whose purpose is to allow a single goods movement of a single material to trigger multiple and simultaneous postings to the G/L (each using a unique approach to inventory accounting), all in a single FI document. Clarity on this term becomes especially important if you also wish to understand how to work with a related functionality known as "Transfer Pricing" in the Profit Center Accounting (PCA) module. Transfer Pricing allows you to create internal profit-and-loss visibility for transactions (such as Goods Issue of Raw Material to Mfg Order) that might represent two things at once: (1) an accounting-relevant consumption of inventory for your company as a whole, and (2) an intracompany sale from one of your product lines to another.

What you will see is that one of the multiple valuations of any inventory movements you can store in your R/3 General Ledger is called the "Profit Center" valuation view. Since you also have a module in R/3 called Profit Center Accounting, as well as a module that will store multiple unit values for each material (called the Material Ledger), this starts to become confusing. Which is which? And what are the relationships? I will answer these questions.

The sequence of discussion will be an example of what is meant by Parallel Valuation, followed by a closer look at the settings in the MM module (Material Ledger, Material Master) and PCA module (internal sales prices masters) needed to make Transfer Pricing work. Finally, you will see via screenprints the various debits and credits posted in the FI document in response to a single goods movement when three different Valuations and Transfer Pricing are active, as well as see which of those are copied into the Profit Center Accounting document.

Kurt Goldsmith

Kurt Goldsmith is a senior business consultant for Enowa Consulting, specializing in the diagnosis and resolution of productivity-related integration issues between a company’s division of labor (end users, managers, executives) and SAP software (R/3, BW, APO, CRM). He also has a lifetime performance record of one win and two third-place finishes from five career starts as a thoroughbred racehorse trainer.

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