1. Multi-Currency R12 General Ledger Management Fundamentals

2. Objectives After completing this lesson, you should be able to do the following: Define foreign currencies Enter foreign currency journals Revalue foreign currency balances Translate functional balances into foreign currency Describe how RC affects General Ledger activities

3. Overview of Multi-Currency Pounds YenDollarEuro

4. Translation Revaluation Conversion Foreign Currency Concepts There are three key concepts in Oracle General Ledger that pertain to foreign currency:

5. Integrating with Subledgers Foreign currency obligation is entered in Oracle Payables Payables journal entry is recorded in General Ledger Foreign currency is revalued and the unrealized gain or lost is recorded Payables journal entry is recorded in General Ledger Realized foreign currency gain or loss is calculated Foreign currency obligation is paid in Oracle Payables

6. Reporting Currencies Useful for consolidation reporting and analysis No need to physically move balances to create views of consolidation data Beneficial for parent consolidation entities that share the same chart of accounts and calendar with their subsidiaries Tighter link to ledgers! For accounting and reporting in another currency (in addition to the ledger's primary currency) Can be used with Primary or Secondary ledgers Business ReasonsBenefits

7. Defining Currencies Use the Currencies window to define and enable or disable currencies

8. Conversion Overview Oracle General Ledger converts journal amounts entered in a foreign currency to functional currency equivalents using daily conversion rates Functional currencyForeign currency YenDollar Conversion

9. Conversion Example Functional currency Entered Journal Entry Lines DR. Accounts Receivable………………….10,000 Euro CR. Revenue…………………………………………10,000 Euro CONVERT 1 Euro =.8 US Dollars DR. Accounts Receivable………………….… 8,000 US$ CR. Revenue……………………………………….….. 8,000 US$ Foreign currency

10. Defining Conversion Rate Types Foreign Currency Journals Functional Currency Journals Rate Types: –Spot –Corporate –User –EMU Fixed –User Defined

11. Daily Rates 5-1-97JPY/USSPOT.7155 5-1-97JPY/CADCORP.0112 Entering Daily Rates Rates are Shared Across Ledgers Loading Daily Rates Automatically

12. Revaluation Overview Revalue account balances to reflect the change in the foreign currency rate from the date a transaction is entered and the reporting date Paris New York Original U.S. Receivable 1000 Euro 550 U.S. Dollars Revalued U.S. Receivable 1000 Euro 600 U.S. Dollars USD Unrealized Gain 50 U.S. Dollars

13. Revaluation Process Functional currency Conversion at the time of the foreign currency transaction Revaluation at the end of the accounting period Foreign currencies

14. Running Revaluation Collect Foreign Currency Receivable Is the foreign Currency Receivable Still Unpaid? Reverse Revaluation Journals Revalue Foreign Currency Balances Post to Unrealized Gain/Loss Account Post to Realized Gain/Loss Account Yes No

15. Revaluation Example REVALUE 1 Euro =.81 US Dollars CR. Unrealized Gain…………………………………….. 100 US$ Entered Journal Entry Lines DR. Accounts Receivable………………….10,000 Euro CR. Revenue…………………………………………10,000 Euro Convert 1 Euro =.8 US Dollars DR. Accounts Receivable………………….… 8,000 US$ CR. Revenue……………………………………….….. 8,000 US$ DR. Accounts Receivable………………….… 100 US$

16. –Maintain consistency among different conversion rates and currencies –Minimize imbalances during intercompany eliminations due to exchange rate differences –Maintain daily rates and historical rates more easily Currency Rates Manager Description A new user-friendly tool to manage daily and historical rates Global companies can now:

17. Daily Rates Historical Rates Currency Rates Manager Description (continued) Upload daily rates from a spreadsheet or enter and maintain rates in the new Web-interface Cross Rate Rules automatically calculate the cross rates between two or more currencies Upload and download historical rates via a spreadsheet Added security prevents uploading rates to closed periods

18. Currency Rates Manager Benefits Easy-to-Use Interface Enter and maintain daily rates in the new Web-interface or spreadsheet interface Improved Efficiency Quickly upload daily and historical rates from a spreadsheet Copy historical rates from one ledger to another Better Consistency Apply Cross Rate Rules to ensure consistency across currency rates by automatically calculating the cross rates between two or more currencies

19. FromTo Currency DateType Conversion USDEUR30-Sep-03Spot.9002521.1108000871 USDJPY30-Sep-03Spot116.81.0085609109 The following currency rates have been defined: Currency Rates Manager will calculate the cross rate between EUR and JPY and its inverse FromToDateType EURJPY30-Sep-03Spot129.753 EUR JPY.0077069509 JPY EUR Using Cross Rate Rules

20. Translation Overview Foreign currency translation is a process that lets you restate your functional currency account balances into a reporting currency Foreign currency Functional Balance Sheet AssetsLiabilities Foreign Balance Sheet AssetsLiabilities 100,00060,000 Period end Rate = 0.75 Historical Rate = 0.70 75,00045,000 Owner's Equity 40,000 28,000 Period end Rate = 0.75 Functional currency

21. Translation General Ledger selects translation rates based on the GL Account Type and Translation Rate Type: Monetary Assets, Liabilities Non-Monetary Assets, Liabilities Revenue, Expense Equity GL Account TypePeriod-EndPeriod-AverageHistoric

22. Balances and Rates Used for Translation Account Type Assets Liabilities Revenue Expense Equity Balance and Rate Used in Translation Cumulative balance and period-end rate Periodic balances and period average rates Cumulative balance and period-end rate Cumulative balance and period-end rate unless historical rates are defined for these accounts

23. Cumulative Translation Adjustment Account Japanese Yen Translate U.S. Dollar Cumulative Translation Adjustment Account Net difference to balance translated chart of accounts

24. Historical Rates Historical Rates are a weighted average rate for transactions that occur at different times Historical Rates are used to report journal entry line amounts in the units of money that were current when the transactions took place Historical balances are the opposite of inflation adjusted balances

25. Translation with Historical Rates and Amounts If you have defined historical rates or amounts, Oracle General Ledger selects one of two amounts that is used to arrive at a translated balance for your account: –Account Balance –Net Activity The amount differs depending on the type of account to which the historical rate or amount applies: –Revenue/Expense –Asset/Liability –Owner's Equity

26. Translating Owners' Equity Accounts General Ledger translates owners' equity accounts in accordance with SFAS #52 (U.S.), using historical rates or amounts and one of the following rules: Period-to-Date Year-to-Date

27. Department Secondary Tracking Segment Company Balancing Segment Line of Bus. Cost Center Segment Account Natural Account Segment Subsidiary Intercompany Segment Secondary Tracking Segment Description Process, analyze and audit business units by two segments: Primary Balancing Segment Secondary Tracking Segment

28. Balancing Segment Secondary Tracking Segment Account CoDept Revaluation Unrealized Gains/Losses Year End Close Translation Process CoDeptRetained Earnings CoDeptRetained Earnings/CTA Secondary Tracking Segment Description (continued) Each account can be tracked by unique pairs of values for the balancing segment and secondary tracking segment

29. Secondary Tracking Segment Benefits Better Audit and Analysis Provides more detail to retained earnings, cumulative translation adjustments and revaluation gains/losses accounts Better Control and Consistency Maintains consistency for similar transactions within a ledger because this option is set at the ledger level Greater Flexibility Choose any segment, except your balancing or natural account segment, to act as the secondary tracking segment

30. How to Set Up Secondary Tracking Segment Department Secondary Tracking Segment Company Balancing Segment Line of Bus. Cost Center Segment Account Natural Account Segment Subsidiary Inter- company Segment

31. CompanyDepartment Balancing Segment Secondary Tracking Segment and Cost Center Segment Account Natural Account Segment Using Secondary Tracking Segment The following chart of accounts structure exists:

32. Secondary Tracking Segment Closing and Translation Example Account 01.200.Expense 01.200.Revenue 01.100.Expense 01.100.Revenue Year End Close and Translation creates accounts by pairs of segments USD Balance 200 DR 300 CR 500 DR 1,000 CR Cumulative Rate 125 140 120 135 Translated YEN 25,000 DR 42,000 CR 60,000 DR 135,000 CR Account 01.200.Retained Earnings 01.100.Retained Earnings USD Balance 100 CR 500 CR Calculated Rate 170 150 Translated YEN 17,000 CR 75,000 CR

33. Secondary Tracking Segment Revaluation Example Revaluation creates accounts by pairs of segments Revalued Accounts 01.200.Liability 01.200.Asset 01.100.Liability 01.100.Asset Unrealized Gain/Loss Accounts Generated 01.200.Unrealized Gain 01.100.Unrealized Loss Amount 200 DR 300 DR 500 DR 1,000 CR Amount 500 CR 500 DR

34. Calculated Period Prior Automatically Assigned Rate Types

35. Period Rates Listing Historical Rates Listing Daily Conversion Rates Listing Foreign Currency Listings Review the rates defined for any accounting period using standard listings from the Submit Requests window

36. Foreign Currency Reports Foreign Currency General Ledger Report Foreign Currency Journals Report Foreign Currency Detail Trial Balance Report Foreign Currency Summary 1 Trial Balance Translation Trial Balance Foreign Account Analysis Report Foreign Account Analysis Report with Payables Detail

37. Multi-Currency Profile Options GL: Income Statement Accounts Revaluation Rule GL: Revaluation: Autoquery Last Run Ranges GL: Owners Equity Translation Rule Journals: Allow Multiple Exchange Rates Journals: Display Inverse Rate

38. Summary In this lesson, you should have learned how to: Define foreign currencies Enter foreign currency journals Revalue foreign currency balances Translate functional balances into foreign currency Describe how RC affects General Ledger activities