Consolidations and Eliminations in AX2012
Transcript of Consolidations and Eliminations in AX2012
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Consolidations and Eliminations in AX2012
11 September 2014Dan McAllister
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Objectives
• Translate a global structure into AX entity structure
• Demonstrate setup, process, and review of AX consolidations
• Explain the purpose and use of elimination entities
• Demonstrate setup, process, and review of AX eliminations
• Learn more about standard AX features
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Consolidations and Eliminations - Agenda
• Consolidations in AX2009/AX2012• Overview• Setup Steps• Processing Steps
• Demonstration
• Review and Corrections
• Eliminations in AX2009/AX2012• Overview
• Elimination Companies – Why?
• Setup Steps• Processing Steps
• Demonstration
• Review and Posting of Eliminations
• Consolidations and Eliminations in Management Reporter
• Revaluation Reversal Complications and Hotfix
Note: This is not a low-level training course; additional training material is available.
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Consolidations - Overview
US $ Parent
US $ Subsidiary EU € Subsidiary EU € Subsidiary
Requirements:
• Report on US operations
• Report on EU operations
• Report on Global operations
• Demonstrate that the US $ Parent company owns subsidiaries
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Consolidations - Overview
US $ Parent US $ Subsidiary EU € Subsidiary EU € Subsidiary
Operating Company
Non-Operating Company
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Consolidations - Overview
US $ Parent US $ Subsidiary
US $ Consolidation
EU € Subsidiary EU € Subsidiary
EU € Consolidation
Operating Company
Non-Operating Company
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Consolidations - Overview
US $ Parent US $ Subsidiary
US $ Consolidation
US $ Elimination
EU € Subsidiary EU € Subsidiary
EU € Consolidation
EU € Elimination
Operating Company
Non-Operating Company
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Consolidations - Overview
US $ Parent US $ Subsidiary
US $ Consolidation
US $ Elimination
EU € Subsidiary EU € Subsidiary
EU € Consolidation
EU € Elimination
Global $ Consolidation
Global $/€Elimination
Operating Company
Non-Operating Company
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Consolidations - OverviewSelect:
• Account # Range
• Transaction Date Range
• Companies (% Share)
• Exchange Rate Definitions
• Considerations for hierarchy, eliminations
US $ Parent US $ Subsidiary
US $ Consolidation
US $ Elimination
EU € Subsidiary EU € Subsidiary
EU € Consolidation
EU € Elimination
Global $ Consolidation
Global $/€Elimination
Operating Company
Non-Operating Company
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Consolidations - Setup Steps
Create AX Consolidation Entity (2012 R3 Demo: GLMF)
• Standard AX Legal Entity
• Less Journals
• Plus Ledger Elimination Rules (if appropriate)
Simplify the Process
• Apply the same Chart of Accounts and Account Structures in Consolidation and Subsidiary Companies
It is not possible to transact in a consolidation company.
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Consolidations – FX Accounts
From the standpoint of a US Parent Company:
• If a foreign subsidiary is owned but operates independently, post FX translation to OCI
• If a foreign subsidiary is an extension of US operations and remits payments back to the parent, post FX translation to Unrealized Gain/Loss
Net result is the same: offset is equity
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Consolidations - Processing Steps
• From the consolidation company • GL Periodic Consolidate Consolidate (Online)
• Criteria – Accounts, Dates, Budgets
• Financial Dimensions – Dimensions, Company Accounts, Group Dimensions
• Legal Entities – Entities, Elimination Entities, %Ownership
• Description
• Elimination – During consolidation or separate?
• Currency Translation – AX2009 vs. AX2012
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Consolidations - Review
• Review• Trial Balance
• AX Financial Statements
• Other reporting tools
• Reapply consolidations if required• GL Inquiries Consolidations Remove Transactions
• Re-Run Consolidation
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Eliminations
• Overview
• Setup Steps
• Processing Steps
• Review/Posting
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Eliminations - Overview
Why Elimination Companies?
• Currency Translation
• Reporting
US $ Parent US $ Subsidiary
US $ Consolidation
US $ Elimination
EU € Subsidiary EU € Subsidiary
EU € Consolidation
EU € Elimination
Global $ Consolidation
Global $/€Elimination
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Eliminations - Overview
(US Parent) (EU Subsidiary) (Elimination) (Consolidation)
USMF DEMF ELIM GLMF110110
110130
110160
130100
130300
133300
133500
140100
140200
150100
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Eliminations - Overview
Processing steps when using Elimination Rules:
1. Run Consolidation in Consolidation Company
2. Create/Run/Post Elimination Journal in Elimination Company
3. Remove Consolidation (optional)
4. Re-Run Consolidation in Consolidation Company (Incl. Elimination)
5. Review
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Eliminations - Setup Steps
• Elimination Legal Entity• Org Admin Setup Organization Legal Entities – Check “Elimination”
box
• GL Setup Journals Journal Names - Elimination
• Consolidation Legal Entity• GL Setup Posting Ledger Elimination Rule
• Lines
• Net Change vs. Fixed Amount
• Source vs. Destination
It is possible to transact in an elimination company.
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Trial Balance - Initial Loan (January)
Parent Subsidiary Elimination Consolidation
Asset 100,000.00$ -$ (100,000.00)$ -$
Liability -$ (100,000.00)$ 100,000.00$ -$
Eliminations - Example
US Parent (R2 Demo: USMF) loans $100,000 to subsidiary (R2 Demo: DEMF). This is an asset on the Parent’s books and liability on the Subsidiary’s books. When looking at the US consolidation (GLMF), we eliminate this transaction.
Other examples: • Parent/Subsidiary ownership• Intercompany revenue/subcontracting
A + B + C = D
A B
C
D
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Eliminations - Example
Subsidiary (R2 Demo: DEMF) repays $50,000 to US Parent (R2 Demo: USMF). This is an asset on the Parent’s books and liability on the Subsidiary’s books. When looking at the US consolidation (GLMF), we eliminate this transaction.
Other examples: • Parent/Subsidiary ownership• Intercompany revenue/subcontracting
Feb. 50% Loan Repayment
Parent journal: DR CashCR Asset
Subsidiary journal: DR LiabilityCR Cash
Elimination journal: DR AssetCR Liability
Trial Balance - 50% Loan Repayment (February)
Parent Subsidiary Elimination Consolidation
Asset 50,000.00$ -$ (50,000.00)$ -$
Liability -$ (50,000.00)$ 50,000.00$ -$
A + B + C = D
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Eliminations - Processing Steps
Review Consolidation Trial Balance/Financial Statements pre-elimination, then:
• Elimination Company• Create Elimination Journal
• Run Elimination Proposal
• Post
• Consolidation Company• Remove previous consolidation (optional)
• Rerun consolidation (note description)
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Consolidations and Eliminations
Processing steps when using Elimination Rules:
1. Run Consolidation in Consolidation Company
2. Create/Run/Post Elimination Journal in Elimination Company
3. Remove Consolidation (optional)
4. Re-Run Consolidation in Consolidation Company (Incl. Elimination)
5. Review
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Consolidate using Management Reporter -Overview
Consolidating and Eliminating in a multi-company and currency scenario:
• Month 1: US parent company is funded
• Month 2: DE subsidiary is loaned money
• Month 3: FX rate changes
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Consolidate using Management Reporter – Main Account Setup
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Consolidate using Management Reporter – Month 1
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Consolidate using Management Reporter – Month 2
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Consolidate using Management Reporter – Month 3
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Consolidate using Management Reporter – Column Definition Setup
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Consolidate using MR
• Configure Main Account FX Type
• Set up in Management Reporter:• Row Definition (Standard)
• Column Definition (Calculate Eliminations)
• Reporting Tree (Standard)
• Report Definition (Standard)
• Run reports
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Revaluation Complications
Standard AX does not allow users to reverse FX Revaluations; if a user revalues a company and then a rate or transaction changes a user can rerun the revaluation and overwrite what was done. There are, however, complications with dimensions that can be fixed in a transactional company but not in a consolidation company.
Solution: The hotfix that comes with KB2957289 for AX 2012 R2 and R3 allows the reversal of FX Revaluations. Find this hotfix in Issue Search using the KB number and note that while it lists as being for R2, there is also an R3 version that you can download from the “Download Hotfix” screen.
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Consolidations and Eliminations
• This presentation and additional training material available online
• Any further questions:Dan McAllister, [email protected]
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