Agenda video https://www.youtube.com/watch?

v=ccf1KFhDdIU

Transfer pricing definition

A transfer price is a price used to valuate the transfer of a good or service between independently operating
units of an organization. Transfer pricing is commonly carried out between legal entities (company codes),
however on SAP it can be set up between non-legal entities such as profit centers and plants.

Company code transfer pricing: prices usually set using SD conditions, while for profit center transfer pricing
the prices are set using profit centers conditions

Prerequisites
Different views of a company’s financials

 Legal valuation view: if you do not use TP, treats every company codes as independent. Allows you
to represent profits optimally in the financial statements of the company code for tax purposes and
according to GAAP Standards.
 Group valuation view: treats intercompany transactions as if they happen within the same
company, thus eliminating intercompany profits. Allows strategic decision making by viewing data
as if the group acts as a single company code by eliminating internal profits throughout the financial
transaction flow.
  PC valuation view: each profit center or group of profit centers has a special price that they use to
do transactions, different from that of the legal or group price. Allows you to view the profit of
individual areas of responsibility as if they were selling entities not part of the larger group.

Valuation views represent how the inventory is valued and currency type which indicates the currency used
to value the inventory

First configuration o carry out a transfer pricing on SAP:

8KEM t-code used to set which valuation approaches are managed in which currency in accounting.

When indicating the valuation and currency associated, it is necessary to use the following codes depending
on the currency and valuation choices
 Valuation
Legal Group Profit Center
(0) (1) (2)
Local
10 11 12
Currenc (10)
y Grou
30 31 32
p (30)

For example:

 Legal valuation (0) - company code currency (10) = 10 (in legal valuation the company code currency
is mandatory)
 Group valuation (1) - group currency (30) = 31
 Profit Center Valuation (2) - company code currency (10) =12

The currency and valuation profiles can only be changed as long as they are not yet assigned and not yet
active in the controlling area

If you are doing a conversion and ML is already active but only in legal valuation, the cutover to parallel
valuation is not yet supported by SAP standard in S/4 HANA. Also, subsequent implementation of multiple
valuation approaches in a productive SAP S/4HANA system is not yet supported

All valuation approaches you manage in accounting must also be managed correspondingly in the material
ledger.

We need to activate the material ledger before using this functionality (see the third step)

Second configuration:

FINSC_LEDGER t-code to define Settings for Ledgers and Currency Types. Here you can update the multiple
valuation approaches in addition to the legal valuation approach in the leading ledger or a non-leading
ledger, and for company code belonging to that specific ledger
2 ways to store multiple valuations:

1) Multi-valuation Ledger – insert many valuation approaches, together with the in addition to the
legal valuation approaches in the leading ledger or a non-leading ledger

PROS:
 Currency types of all Valuations can be assigned to the leading ledger or a non-leading
ledger, no additional ledgers will be needed
 No separate month end closing in ML
 Memory footprint optimized as we only one ledger will get updated with all valuations
 Default for Migration

In our case the leading ledger is 0L. You then select “company code settings for the ledger” on the right.
After doing so you’ll have to select the company code you want to maintain
In this section of SPRO you can add other currencies associated to a valuation choice (group, profit center)
to a company code (the legal one is already present).

It is mandatory to maintain both currency types for each valuation approach in transaction FINSC_LEDGER,
for example: 11 and 31 or 12 and 32. Here below in the freely defined currencies 1 and 2 on the right, we
have 31 and 32 instead (from video https://www.youtube.com/watch?v=q0H55Re6u7U)
 2) Parallel single-valuation Ledgers – create a separate valuation ledger for every valuation approach
(seems not to be completely possible due to certain restrictions in Asset Accounting)

PROS:
 Valuation is assigned to Ledger
 Option for new installations
 Easier authorization concept

Example: in ledger OL you have 10 and 30

In ledger L2 you have 11 and 31

In ledger L3 you have 12 and 32

Third configuration:

OMX1 t-code to activate material ledger

Material ledger is mandatory to be active on S/4HANA (actual costing is not mandatory to be active)

Fourth configuration:

OMX2 t-code to define the currency types in the material ledger. Many options available as shown below.
N.B. the main difference between ECC and S/4HANA is that in ECC we can tick the boxes CT from FI and CO
CrcyTyp (?)
To maintain the currency type for a specific material ledger type, you select it and press “define individual
characteristics” on the right, as shown below.

N.B. Profit center valuation and/or group valuation should be assigned to a material ledger type only in the
currency maintained in the Currency and Valuation Profile. Currency types 11 and 31 or 12 and 32 cannot
be processed completely in parallel along the value chain.

Fifth configuration:

OMX3 t-code to assign material ledger type (chose before) to plants and company codes

Sixth configuration:

OB22 t-code to see currency types assigned to company code (yo edit currency settings you need to use
FINSC_LEDGER as described earlier)
Seventh configuration:

To make sure every CO transaction is in the right format (the newest is related to the fact that the modules
FI and CO are both under the table ACDOCA), we need to maintain two versions for multiple valuations and
to assign the ledgers to these CO versions.

We follow this path:

The two versions two maintain other than the version 0, are group and profit center ones

You select both, you click then on controlling area settings

You then click on “valuation” on the top right corner

You should see the message highlighted. Also check the controlling area whether it is correct or not

Further configuration:

You need to activate the currency and valuation profile in your controlling area

t-code 8KEP or follow the path below on SPRO

You have to insert the company code

After activating you can check whether everything is correct by clicking on check activation as shown above
and you would see this