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Intercompany and Dual currency Presenters: James Sonne AX UG - BosTON Intercompany and Dual currency Presenters: James Sonne Title page to include presentation title/topic, speaker, date etc. January 17, 2019 1:00 – 2:00 pm

Presenter James Sonne, D365F&O Enterprise Delivery Manager James is a functional senior consultant with extensive experience working on packaged and custom ERP systems in operational, consulting and IT environments. He has over 25 years of controller/vice president of finance experience and worked with a variety of industries throughout his career. He has worked on many Microsoft Dynamics AX implementations over the past ten years both as a sole consultant/manager, and as team senior financial lead. Prior to working with DAX, James has administered custom ERP systems in Windows, AS/400, and Unix/Xenix environments. In addition to mature financial management, his skills include repair of broken implementations, data conversion, software development, software integration, and post-implementation support. He has extensive knowledge of Dynamics AX accounts receivable, accounts payable, general ledger, inventory, trade allowance, and production modules. As well as Dynamics AX implementations, he was involved various levels of Dynamics AX technical trainings. James’s areas of practice have included: acquisitions and dispositions, administration/executive management, bankruptcies and foreclosures, data migrations and database mining, disbursing agent, ERP/financial systems implementation, financial modeling and budgeting, general ledger and financial statements, interim executive management, internal audit, network administration, network design and engineering, process discovery, retirement savings plan trustee, revenue recognition, system training and procedure documentation. Education: BS, Accounting, Mankato State, MN

Agenda 1:00 p.m. – 1:40 p.m. Intercompany Presentation 1:40 p.m. – 1:50 p.m. Dual currency presentation 1:50 p.m. – 2:00 p.m. Question & Answers

Objectives Flavors - Intercompany Transaction Types Setup Ledger Ledger journals with mixed companies Intercompany Sales and Purchase of Inventory Setup Ledger Chart of Accounts Posting Profiles Setup Inventory, Customers, Vendors Intercompany Customers and Vendors Customer and Vendor Posting Profiles Drop Ship End Customers (incl. cost price check box) Process Examples General Journal Drop Ship Sales Order to End Customer Standard content slide with simple bulleted content

Definitions The term Intercompany (IC) is used to describe transactions between two separate AX / D365FO legal entities. The setup and processing goal facilitates advanced accounting requirements by balancing (mathematically synchronizing) the related transactions. There are two forms of IC in AX / D365 Without Inventory Ledger General Journals (GJ) With Inventory Intercompany Sales / Purchase orders (IC SO PO) (related: IC payments) Standard content slide with simple bulleted content

GJ – Setup - Overview Chart of Accounts Journal Names Posting Profiles Create Receivable Payable Revenue and Consumption accounts Journal Names Create Intercompany Journal Posting Profiles Intercompany Posting Accounts Standard content slide with simple bulleted content

Which of the following are valid AX intercompany types? a. IC Sales order / Purchase order b. IC Transfer order c. IC Quarantine order d. All of the above

Which of the following are valid AX intercompany types? a. IC Sales order / Purchase order b. IC Transfer order c. IC Quarantine order d. All of the above

Chart of Accounts – Used by transactional and consolidation LE COA Setup – Plan - 10,000 feet (GJ EX1: Cash $5M, EX2: PPD $10k/mo.) (EX3: IC SO PO $xxx) Chart of Accounts – Used by transactional and consolidation LE Create Receivable Payable Revenue and Consumption accounts Kevin

GJ Goal – Post Balanced IC GJ General ledger > Journals > General journal Kevin

Chart of Accounts one set strategy19* Ledger Setup – COA plan Chart of Accounts one set strategy19* Create Receivable Payable Revenue and Consumption accounts Kevin

Ledger Setup – COA setup Chart of Accounts Create new accounts for General Journals General ledger > Setup > Chart of Accounts > Chart of Accounts > New Kevin

COA – Setup – Assign accounts Posting Profiles General ledger > Setup > Posting > Intercompany Accounting There will be a dance, different setup by company Kevin

COA – Setup – Assign accounts Posting Profiles General ledger > Setup > Journals > Journal names Kevin

Process – Post an IC GJ General ledger > Journals > General journal Kevin

Goal Achieved - Balanced IC GJ Vouchers – $5 M Cash General ledger > Journals > General journal > Voucher > Transaction origin Kevin

Goal Achieved - Balanced IC GJ Vouchers - $10 K per month Prepaids General ledger > Journals > General journal > Voucher > Transaction origin Kevin

IC SO Goal - Trial Balance Example Consolidated Trial Balance before eliminations Kevin

IC SO PO – Setup - Overview Customer Vendor Point Customer and Vendor to each other Posting Profiles Assign Customer and Vendor posting profiles Assign Revenue and Consumption posting profiles Items Assign to the IC Vendor Drop Ship End Customers Set the Cost Price Checkbox Standard content slide with simple bulleted content

IC SO PO – Scenario: Drop Ship to End Customer Kevin

IC SO PO – Assign Revenue and COGS Accounts Inventory management > Setup > Posting > Posting Kevin

IC SO PO – Customer Vendor Trading Relationship Setup Activate IC: … > General (ribbon) >Intercompany > Trading relationship Kevin

IC SO PO – Customer Vendor Trading Relationship Setup Similar screen, different path(s) in D365FO D365FO > Accounts receivable > Customers > All customers > General (tab) > Intercompany Kevin

IC SO SP – Purchase order Policies Abc

IC SO PO – Sales order policies

IC SO PO – Customer Vendor Setup Effect Customers and Vendors in different companies are now entangled. Kevin

IC SO PO Setup – Separate IC AR / AP Agings on Trial Balance Accounts receivable (payable) > Setup > Customer (Vendor) posting profiles Kevin

IC SO PO Setup – Assign Items to the IC Vendor Product information management > Released products > [select product] > Product (ribbon) > Purchase (fast tab) > Administration > Vendor Kevin

IC SO PO Setup – Similar setup in D365FO Kevin

IC SO PO Setup – End Customer Setup (Optional) Product information management > Released products > [select product] > Product (ribbon) > Purchase (fast tab) > Administration > Vendor Kevin

IC SO PO Example – SO to End Customer Accounts Receivable > Common > Sales orders > All Sales orders > New > Confirmation Kevin

IC SO PO Example – Linked Intercompany Tracing Kevin

IC SO PO – Balanced Trial Balance Goal Achieved Standard content slide with simple bulleted content

IC SO PO – Vendor Payment Edit Sales order policies Post Customer journal automatically

Dual Currency - Introduction Functionality that was introduced in Microsoft Dynamics 365 for Finance and Operations version 8.1 (October 2018) enables the reporting currency to be repurposed and used as a second accounting currency. This functionality is referred to as dual currency. The changes for dual currency can't be turned off through a configuration key or parameter. Because the reporting currency is used as a second accounting currency, the way that the reporting currency is calculated in the posting logic has changed. Standard content slide with simple bulleted content

Dual Currency – Posting Process The posting logic has been changed for all transactions that generate an accounting entry to general ledger. Here is how the reporting currency was previously calculated: Transaction currency amount > Accounting currency amount > Reporting currency amount CAD USD EUR For example, a transaction is entered in the Canadian dollar (CAD) currency. The CAD amount is translated to the accounting currency, which is the US dollar (USD). The USD amount is then translated to the reporting currency, which is the euro (EUR). Therefore, the exchange rates must exist between CAD and USD, and between USD and EUR. Here is the new calculation: Transaction currency amount > Accounting currency amount (Accounting currency #1) CAD USD Transaction currency amount > Reporting currency amount (Accounting currency #2) CAD EUR Because of this change, exchange rates must now exist between CAD and USD, and between CAD and EUR.

Dual Currency Reports and Inquiries Various reports and inquiries now show both reporting currency amounts and accounting currency amounts. Not every report and inquiry has been updated. For example, reports that show amounts only in the transaction currency haven't changed. The changes follow one of two patterns: If the report or inquiry had enough space to show amounts in both the accounting currency and the reporting currency, the reporting currency amounts were added. If the report or inquiry didn't have enough space to show amounts in both currencies, an option was added so that users can select which currency is shown. For various reports and inquiries, logic was also added to suppress the reporting currency amounts if the reporting currency is the same as the accounting currency, or if the reporting currency wasn't defined on the ledger for the legal entity.

Dual Currency – Module Changes The following modules use the reporting currency as a second accounting currency: General ledger Financial reporting Accounts payable Accounts receivable Cash and bank management Fixed assets

Dual Currency – Accounts payable and Accounts receivable The Accounts payable and Accounts receivable modules already tracked reporting currency amounts. However, the amounts weren't shown or used for various processes. The following changes were made: Reporting currency amounts are now shown on transactions for both customers and vendors. Reporting currency amounts are also shown for the open balance of each transaction. The aging process has been updated so that an organization can view the aging buckets in either the accounting currency or the reporting currency. Various inquiries and reports were updated so that they show reporting currency amounts. Examples include the Customer to ledger reconciliation and Vendor to ledger reconciliation reports. The process for foreign currency revaluation already revalued amounts in the reporting currency. However, the reporting currency amount is now calculated through the transaction currency amount, as described in the Posting process section. Upgrade consideration: Before an upgrade, the reporting currency amounts for documents (invoices, payments, and so on) are calculated through the accounting currency. For example, an invoice is posted before an organization upgrades, and the invoice isn't paid. During the upgrade, the invoice's accounting entry isn't changed. However, after the upgrade, the changes for dual currency are in effect. Therefore, when a payment is made for the invoice, the payment's reporting currency amount is now calculated through the transaction currency amount. When the payment and invoice are settled, a slight difference might be calculated in the realized gain/loss amount, because reporting currency amounts are now calculated differently. If the difference that is calculated is considered significant, the new Reporting currency adjustment journal can be used to adjust the balance of the realized gain/loss and Accounts payable/Accounts receivable ledger accounts in the reporting currency only.

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