1

Overview: .......................................................................................................................2 New MRC Architecture:..................................................................................................4 Setting Up MRC..............................................................................................................6

Step 1: Enable or Define Primary Set of Books............................................................7 Step 2: Define Reporting Set of Books ........................................................................8 Step 3: Define Responsibilities ....................................................................................9 Step 4: Set the Profile Options for the Responsibilities ..............................................13 Step 5: Define Exchange Rate....................................................................................20 Step 6: Assign Reporting Set of Books to Primary Set of Books ................................21 Step 7: Define Conversion Option for each Application.............................................22

Simulation of MRC Feature:..........................................................................................24 New Feature in the MRC Subledger: .............................................................................42 MRC Conversion Business Rules: .................................................................................43

Subledger Data for an AP Invoice when the Transaction currency same as Primary Currency: ..................................................................................................................45 Transaction Currency Differs from Primary and Reporting Currency:........................46 Subledger Data for an AP Invoice when the Transaction currency differs from the Primary and Reporting Currency: ..............................................................................48 Transaction Currency Differs from Primary and Reporting Currency and You Specify the Conversion Exchange Rate: .................................................................................49 Subledger Data for an AP Invoice when the Transaction currency differs from the Primary and Reporting Currency and user specifies the rate:......................................51 Transaction Currency Same as Reporting Currency ...................................................52 What is the purpose of Inherit Checkbox in conversion options?................................53

Revaluation: ..................................................................................................................57 Revalue Primary Set of Books...................................................................................59 In the primary set of books, post the revaluation journals generated by Step1 ............62 Post Reporting Set of Books......................................................................................64 Revalue Reporting Set of Books................................................................................65

FAS-52:.................................................................................................................67 Post Reporting Sets of Books.....................................................................................71

2

Multiple Reporting Currencies Overview:

Multiple Reporting Currencies (MRC) is a set of unique features imbedded in Oracle Applications that permits an organization to report in multiple functional currencies.

Using MRC, you can maintain and report accounting records at the transaction level in more than one functional currency. You do this by defining one or more reporting sets of books, each associated with a primary set of books. Each set of books has its own functional currency.

The following Oracle Applications support Multiple Reporting Currencies: a) General Ledger b) Payables c) Purchasing d) Receivables e) Cash Management f) Projects g) Assets h) Cost Management i) Global Accounting Engine

Use of MRC: MRC is intended for use by organizations that must regularly and routinely support statutory and legal reporting of both transactions andGeneral Ledger account balances in multiple currenciesother than the primary functional currency. If you only need to report balances in a currency other than your primary functional currency, you can use General Ledger translation. MRC Features a) Transaction–Level Conversion

When you enter transactions in Oracle Applications that support MRC, they are automatically converted into your primary functional currency and each of your reporting functional currencies, in accordance with the following: • Primary functional currency transactions: All transactions denominated in your primary

functional currency are recorded in this currency. The transactions are also converted automatically into each of your reporting functional currencies.

• Foreign currency transactions: Transactions denominated in a foreign currency are automatically converted into your primary functional currency and into each of your reporting functional currencies as wellunless the foreign currency matches the reporting functional currency (conversion not required).

3

b) Subledger Transactions When you enter transactions into Oracle Applications subledgers that support MRC, the transactions are converted into your primary and reporting functional currencies at the time of original entry. The primary functional currency amounts and their associated reporting currency amounts are stored together in your subledgers. You must post subledger transactions to General Ledger in the primary set of books and in each reporting set of books. c) Inquiry and Reporting in Multiple Currencies Because subledger transactions are converted into your reporting functional currencies at the time of original entry, the converted transactions are available for immediate inquiry and reporting. After you have posted your subledger transactions to General Ledger in the primary set of books and in each associated reporting set of books, you can log into a General Ledger reporting responsibility, post the newly created journals, and report the journals and the account balances of the reporting set of books. When you inquire on account balances and journals in a reporting set of books, you can drill down to the subledger details (in your reporting functional currency), using General Ledger’s integrated drilldown features to provide complete and consistent views of underlying subledger transactions. You can drill down from General Ledger to transaction details within Oracle Receivables, Oracle Payables, Oracle Projects, Oracle Assets, Oracle Purchasing, Oracle Inventory, and Oracle Work in Process.

4

New MRC Architecture: The old MRC schema used before 11.5.10 (APPS_MRC), containing its own objects, is no longer used and was replaced by a more integrated architecture. The upgrade to Release 11.5.10 drops the MRC schema. Auto Patch and the AD Administration utility recognize this fact and no longer maintain the MRC schema. As of Release 11.5.10, the MRC schema is no longer required for Multiple Reporting Currency functionality. It is not necessary to synchronize the MRC schema either before or after you apply the maintenance pack, and you can remove the MRC schema after you complete the maintenance pack application. For some products (like Oracle Assets) the Reporting Responsibilities are obsolete and will not give access to the forms, reports and processes. Instead, the code units are prepared to report in the selected reporting currency from the Primary Responsibility. For other products (like Oracle General Ledger) the Reporting Responsibilities are still needed to access the Reporting Set of Books information. In general the processes that required separated logins (responsibilitiy) and steps for each set of books are now submited in a single step for all sets of books from a single responsibility. Starting with 11i.AR.M, MRC: Journal Transfer in all sets of books has been obsoleted. The process is to run GL transfer from the AR Primary Responsibility. Note 286714.1, for AR, as per this you only need one responsibility to run the transfer program from the AR to GL. Similarly in the case of Payables (AP), the Payables Transfer to General Ledger program would take care of the transfer from Primary and Reporting Set of Books by setting the Transfer Reporting Book(s) parameter value to ‘Yes’

5

Example Transaction converted in same schema Single subledger responsibility required Transaction converted in same schema Single subledger reponsibility required

GL-Oracle India Primary SOB

INR

GL-Oracle US Reporting SOB

USD

AR Primary CUR –INR

AR Reporting CUR -USD

AP Primary CUR - INR

AP Reporting CUR -

USD

6

Setting Up MRC

The following table provides a summary of the steps you must follow to set up MRC in your applications. The following steps are required for enabling MRC for GL: Description

Step 1 Enable or Define Primary Set of Books

Step 2 Define Reporting Set of Books

Step 3 Define Responsibilities

Step 4 Set the Profile Options for the Responsibilities

Step 5

Define Exchange Rates

Step 6

Assign Reporting Set of Books to Primary Set of Books

Step 7

Define Conversion Options for each Application

7

Step 1: Enable or Define Primary Set of Books

Define GL Primary SOB: Go to GL Responsibility: Setup�Financials�Books�Define

8

Step 2: Define Reporting Set of Books

Define GL Reporting SOB: Go to GL Responsibility: Setup�Financials�Books�Define

9

Step 3: Define Responsibilities

Define Primary GL Responsibility: Go to System Administrator Responsibility: Security�Responsibility�Define

10

Define Reporting GL Responsibility: Go to System Administrator Responsibility: Security�Responsibility�Define

11

Create Subledger Responsibilities: Create AR Responsibility: Go to System Administrator Responsibility: Security�Responsibility�Define

12

Create AP Responsibility: Go to System Administrator Responsibility: Security�Responsibility�Define

13

Step 4: Set the Profile Options for the Responsibilities

Set the Profile Options for GL Primary Responsibility: GL Set of Books Name: Go to System Administrator Responsibility: Profile�Profile System values

14

Set the Profile option for the GL Reporting Responsibility: GL Set of Books Name: Go to System Administrator Responsibility: Profile�Profile System values

15

Set the Profile option for the GL Reporting Responsibility: MRC: Reporting Set Of Books: Go to System Administrator Responsibility: Profile�Profile System values

16

Set the Profile option for the AR Responsibility: MO: Operating Unit �Choose the OU you have defined Go to System Administrator Responsibility: Profile�Profile System values

17

Set the Profile option for the AR Responsibility: GL Set of Books Name: Go to System Administrator Responsibility: Profile�Profile System values

18

Set the Profile option for the AP Responsibility: MO: Operating Unit �Choose the OU you have defined Go to System Administrator Responsibility: Profile�Profile System values

19

Set the Profile option for the AP Responsibility: GL Set of Books Name: Go to System Administrator Responsibility: Profile�Profile System values

20

Step 5: Define Exchange Rate

Define Exchange Rates: Setup�Currencies�Rates�Daily

21

Step 6: Assign Reporting Set of Books to Primary Set of Books

Assign Reporting Set of Books: Go to GL Responsibility: Setup�Financials�Books�Assign

When assigning a Reporting Book to the Primary Book, you may need to define your Conversion Option in the Reporting Book Initialization form. Derive From Original Transaction Rate conversion option is only available when an EMU fixed rate relationship exists between the primary functional currency and the reporting functional currency. For Non EMU Currencies, you would only use the option ‘Use Initialization rate’. Check Note 116162.1 for details.

22

Step 7: Define Conversion Option for each Application

Define Conversion Options: Go to GL Responsibility: Setup�Financials�Books�Assign

Few Pointers: From date: The first date from which MRC will convert transactions to your reporting functional currency. The from date is set on the Conversion Options window for each application In determining which transactions or journals to convert, MRC compares the from date to the: • Transaction or journal date for Payables, Receivables, and General Ledger • Entered date for Purchasing

23

In the case of upgrade Scenario Two only your first MRC period must be the first future–enterable period or, if you do not allow future–enterable periods, the first never opened period in General Ledger for the primary set of books at the time you run the upgrade utilities

Choosing a From Date: Choosing an appropriate from date differs depending on the application for which you are setting the date. The considerations are the same for General Ledger, Payables, Receivables, and Purchasing. For Assets and Projects, the from date is determined automatically General Ledger, Payables, Receivables, and Purchasing When setting the from date, you should choose a date that precedes the first MRC date and which is early enough to allow you to enter back–dated subledger transactions without adversely affecting the account balances in your reporting sets of books. We recommend that you choose a date that precedes the date of the first transaction in each application/operating unit (application only for General Ledger). Note: Back–dated subledger transactions are those whose transaction dates precede the first MRC date. If the from date is not sufficiently early, any back–dated transaction whose accounting date precedes the ‘From date’, will not be converted by MRC to your reporting currencies.

First MRC Date: This is the first date of the first MRC period. You must initialize the account balances in your reporting sets of books on the first MRC date.

24

Simulation of MRC Feature:

Period Status in GL Primary Set of Books:

Go to GL Responsibility: Setup�Open/Close

25

Period Status in GL Reporting Set of Books: Go to GL Responsibility: Setup�Open/Close

26

Run MRC Setup - Create Opening Balance Journals in Reporting Books to Populate the Opening Balance in the GL Reporting Set Of Books: Go to GL Responsibility: Other�Requests

27

Few details about the Program GLMRCU module: MRC Setup - Create Opening Balance Journals in Reporting Books: GLMRCU

12609

101

14610

00-000-0000-0000-000

ZZ-ZZZ-ZZZZ-ZZZZ-ZZZ

I

Feb-05

SHRD0181: glmrcin() - control->primary_sob_id = 12609

SHRD0181: glmrcin() - control->primary_coa_id = 101

SHRD0181: glmrcin() - control->reporting_sob_id = 14610

SHRD0181: reporting_init() - convrate = .0222222222222222222222222222222222222222

SHRD0181: reporting_init() - denomrate = 1

SHRD0181: reporting_init() - numerrate = .0222222222222222222222222222222222222222

SHRD0181: reporting_init() - primary_curr = INR

SHRD0181: reporting_init() - reporting_curr = USD SELECT

'NEW',

14610,

'MRC Open Balances',

'MRC Open Balances',

to_date('2005/01/31', 'YYYY/MM/DD'),

BP.currency_code,

'Corporate',

to_date('2005/01/31', 'YYYY/MM/DD'),

SYSDATE,

'A',

1008195, 'Jan-05'

28

Opening Balance Journal in Reporting Set of Books: Go to GL Responsibility: Journals�Enter

29

Payables Invoice Prior to upgrade: AP Responsibility: Invoices����Entry����Invoices

30

In the Case of Upgrade to MRC for Subledger AP, run the program- MRC Setup - Payables Transactions Upgrade: Phase 1: AP Responsibility: Other����Concurrent

31

Few details about the program APMRCUPG1 module: MRC Setup - Payables Transactions Upgrade: Phase 1 Psob_Id: 12609

Rsob_Id: 14610

Start_Period: Jan-05

If_Rounding_Required: Y

Daily_Rate_For_Future: N

Debug_Flag: N

First_MRC_Date: 01-FEB-05

Init_Conversion_Type: Corporate

Init_Conversion_Date: 31-JAN-05

Conversion_Option_Code: I

MRC Payables Transactions Upgrade Phase I Execution Summary. This phase has the following

four steps: 1. Insert transactions into the MC sub-tables. 2. Update future dated transactions with

current rates. 3. Insert rounding lines. 4. Insert trial balance records in

AP_MRC_TRIAL_BALANCE table.

32

After the above process completes succeAfter the above process completes succeAfter the above process completes succeAfter the above process completes successfully run program MRC Setup ssfully run program MRC Setup ssfully run program MRC Setup ssfully run program MRC Setup ---- Payables Payables Payables Payables

Transactions Upgrade: Phase 2:Transactions Upgrade: Phase 2:Transactions Upgrade: Phase 2:Transactions Upgrade: Phase 2:

AP Responsibility: OtherOtherOtherOther����ConcurrentConcurrentConcurrentConcurrent

Few details about the program APMRCUPG2 module: MRC Setup - Payables Transactions Upgrade: Phase 2 MRC Payables Transactions Upgrade Phase II Execution Summary. This phase has the following step: 1. Update of MRC Varchar2 columns. This phase II process has successfully upgraded all transaction records for all reporting books associated with the primary book TEST SOB.

33

Run the MRC Payables Open Item Report to check the open items for the Reporting Currencies AP Responsibility: OtherOtherOtherOther����ConcurrentConcurrentConcurrentConcurrent

Note: The above report shows only the transaction numbers V4a and V5, where as there were actually 3 transactions prior to upgrade (refer screenshot - Payables invoice prior to upgrade). Transaction number V1 is not getting reflected because the Effective from date is 31-Jan-2005 where as transaction V1 has the invoice date 01-Jan-2005.

34

Few Open Transactions in AR Responsibility Prior to Upgrade: AR Responsibility: Transactions����Transaction Summary

35

In the Case of Upgrade to MRC for Subledger AR, run the program- MRC Setup - Receivables Transactions Upgrade: Phase 1 AR Responsibility: Control����Concurrent

36

Few details about Few details about Few details about Few details about the program ARMRCUPG1 module: MRC Setup the program ARMRCUPG1 module: MRC Setup the program ARMRCUPG1 module: MRC Setup the program ARMRCUPG1 module: MRC Setup ---- Receivables Transactions Receivables Transactions Receivables Transactions Receivables Transactions

Upgrade: Phase 1Upgrade: Phase 1Upgrade: Phase 1Upgrade: Phase 1 Psob_Id: 12609

Rsob_Id: 14610

Start_Period: Jan-05

Use_Current_Rates_for_Future: N

Debug_Flag: N

First_MRC_Date: 01-FEB-05

Conversion Option: I

Init_Conversion_Type: Corporate

Init_Conversion_Date: 31-JAN-05

Start_Period:Jan-05

End_Period: May-05

Run_id: 3

Psob_id: 12609

Apps_id: 222

Rsob_id: 14610

Rep_Curr: USD

Exch_type: Corporate

Exch_date: 31-jan-05 MRC Receivables Transactions Upgrade Phase I Execution Summary. This phase has the

following two steps: 1. Insert transactions into the MC sub-tables. 2. Update future dated

transactions with current rates.

37

After the above process completes successfully run program MRC Setup - Receivables Transactions Upgrade: Phase 2 AR Responsibility: ControlControlControlControl����ConcurrentConcurrentConcurrentConcurrent

Few details about the program ARMRCUPG2 module: MRC Setup Few details about the program ARMRCUPG2 module: MRC Setup Few details about the program ARMRCUPG2 module: MRC Setup Few details about the program ARMRCUPG2 module: MRC Setup ---- Receivables Transactions Receivables Transactions Receivables Transactions Receivables Transactions

Upgrade: PhaUpgrade: PhaUpgrade: PhaUpgrade: Phase 2se 2se 2se 2

MRC Receivables Transactions Upgrade Phase II Execution Summary. This phase has the

following two steps: 1. Insert rounding lines. 2. Update of MRC Varchar2 columns

38

Run the MRC Receivables Open Items Report to check on the open items for the ReportiRun the MRC Receivables Open Items Report to check on the open items for the ReportiRun the MRC Receivables Open Items Report to check on the open items for the ReportiRun the MRC Receivables Open Items Report to check on the open items for the Reporting ng ng ng

currency:currency:currency:currency:

AR Responsibility: ControlControlControlControl����ConcurrentConcurrentConcurrentConcurrent

39

Opening First MRC Period in Primary and Reporting Set of Books in GL: Go to GL Responsibility: Setup�Open/Close

Go to GL Responsibility: Setup�Open/Close

40

Currency Daily Rates: Go to GL Responsibility: Setup�Currencies�Rates�Daily

FromFromFromFrom To To To To Date Date Date Date TypeTypeTypeType ConversionConversionConversionConversion Inverse Inverse Inverse Inverse

ConversionConversionConversionConversion

GBPGBPGBPGBP USDUSDUSDUSD 01010101----FEBFEBFEBFEB----2005200520052005 CorporateCorporateCorporateCorporate 1.88888804941.88888804941.88888804941.8888880494 .529412.529412.529412.529412

GBPGBPGBPGBP INRINRINRINR 01010101----FEBFEBFEBFEB----2005200520052005 CorporateCorporateCorporateCorporate 85858585 .0117647059.0117647059.0117647059.0117647059

USDUSDUSDUSD INRINRINRINR 01010101----FEBFEBFEBFEB----2005200520052005 CorporateCorporateCorporateCorporate 46464646 .021739130.021739130.021739130.0217391304444

41

Opening First MRC period in Subledger AP and AR Responsibility:Opening First MRC period in Subledger AP and AR Responsibility:Opening First MRC period in Subledger AP and AR Responsibility:Opening First MRC period in Subledger AP and AR Responsibility:

Opening the period in the primary subledger responsibility will take care of the reporting Opening the period in the primary subledger responsibility will take care of the reporting Opening the period in the primary subledger responsibility will take care of the reporting Opening the period in the primary subledger responsibility will take care of the reporting

responsibility alsoresponsibility alsoresponsibility alsoresponsibility also Go to Primary AP Responsibility: Accounting�Control Payables Period

Go to Primary AR Responsibility: Control�Accounting�Open/Close Periods

42

New Feature in the MRC Subledger:

The subledger responsibilities like AP, AR, PO, etc now do not require a separate responsibility to reflect the subledger data. After the data has got accounted in AP and AR, you can check on the subledger data by navigating to the View accounting form and then clicking on the ‘Alternate Currency’ button. You then have to choose the desired set of books to check the converted data.

Navigation:Navigation:Navigation:Navigation:

ToolsToolsToolsTools����View AccountingView AccountingView AccountingView Accounting

Click Alternate Currency

43

MRC Conversion Business Rules:

When you enter transactions in Oracle Applications that support MRC, they are converted, as needed, into your primary functional currency and each of your reporting functional currencies, as follows:

• Primary functional currency transactions: Primary functional currency transactions: Primary functional currency transactions: Primary functional currency transactions: All transactions denominated in your primary functional currency are recorded in this currency. MRC converts the transactions automatically to

each of your reporting currencies.

• Foreign currency transactions: Foreign currency transactions: Foreign currency transactions: Foreign currency transactions: Transactions denominated in a foreign currency are converted

automatically to your primary set of books’ functional currency by Oracle Applications’ standard functionality. MRC converts the transactions to each of yourreporting currencies that differ from the transaction’s foreign currency.

MRC generally converts from the transaction currency to your reporting currencies. In some cases, MRC converts from the primary functional currency to your reporting currency. We discuss the reporting currency conversion rules in the next section.

We have discussed below few examples on Variable Exchange Rate Relationship:

Transaction Currency Same as Primary CurrencyTransaction Currency Same as Primary CurrencyTransaction Currency Same as Primary CurrencyTransaction Currency Same as Primary Currency The following diagram illustrates the conversion business rules that apply when the transaction currency is the same as the primary currency and a variable rate relationship exists between the transaction and reporting currencies:

44

Same Same Same Same

MRC Conversion MRC Conversion MRC Conversion MRC Conversion

When the transaction and primary currencies are the same, no conversion is needed to your primary currency. When MRC converts the transaction to your reporting currency, it uses the appropriate reporting conversion type you specified for the:

• Application and operating unit that originated the subledger transaction

• Journal source and journal category that originated the journal

Transaction Currency

Reporting Currency

Primary Currency

45

Subledger Data for an AP Invoice when the Transaction currency same as

Primary Currency:

Navigation:Navigation:Navigation:Navigation: Tools����View Accounting Primary SOB:

Reporting SOB:Reporting SOB:Reporting SOB:Reporting SOB:

46

Transaction Currency Differs from Primary and Reporting Currency:

The following diagram illustrates the conversion business rules that apply when the transaction currency differs from both the primary and reporting currency, and a variable rate relationship exists between the transaction and reporting currencies: Transaction Currency Differs from Primary and Reporting Currency

User Specified or EMU Fixed User Specified or EMU Fixed User Specified or EMU Fixed User Specified or EMU Fixed Reporting conversion typeReporting conversion typeReporting conversion typeReporting conversion type

Conver Conver Conver Conversionsionsionsion MRC ConversionMRC ConversionMRC ConversionMRC Conversion

Transaction currency

Primary Currency Reporting Currency

47

Application converts the transaction to your primary currency using a conversion rate type you specify, or the rate type EMU Fixed when both of your currencies are either an EMU currency or the euro.

MRC converts the transaction to your reporting currency using the appropriate reporting conversion type you specified for the:

• Application and operating unit that originated the subledger transaction

• Journal source and journal category that originated the journal

Example 1

You receive an invoice for 1,00.00 UK Pounds (GBP) from an UK supplier. Your organization uses corporate rates to account for the invoice in your primary set of books, which is maintained in Indian Rupee (INR). You use corporate exchange rates to convert amounts to U.S. dollars (USD) for reporting purposes. Summary of related information: Transaction Currency GBP Primary Currency INR Reporting Currency USD Corporate Exchange Rate (GBP to INR) 85 Corporate Exchange Rate (GBP to USD) 1.8888880494 This is how the invoice will be converted: Transaction Amount 100.00 GBP Primary Amount 8500.00 (85 * 100 GBP) Reporting Amount 188.89 (1.8888880494 * 100 GBP)

48

Subledger Data for an AP Invoice when the Transaction currency differs

from the Primary and Reporting Currency:

Navigation:Navigation:Navigation:Navigation: Tools����View Accounting Primary SOB:

Reporting SOB:

49

Transaction Currency Differs from Primary and Reporting Currency and You

Specify the Conversion Exchange Rate:

The following diagram illustrates the conversion business rules that apply when the transaction currency is different from both the primary currency and the reporting currency, a variable rate relationship exists between the transaction and reporting currencies, and you specify a transaction–to–primary currency conversion rate when you enter the transaction:

Transaction currency differs from Primary and Reporting currency and User specifies the rateTransaction currency differs from Primary and Reporting currency and User specifies the rateTransaction currency differs from Primary and Reporting currency and User specifies the rateTransaction currency differs from Primary and Reporting currency and User specifies the rate

Conversion User Specified Exchange Rate Reporting Conversion Type MRC Conversion Your application converts the transaction to your primary currency using the rate you specify. The conversion rate type will be User in both your primary and reporting set of books. MRC converts the converted primary currency transaction to your reporting currency using the appropriate reporting conversion type you specified for the:

• Αpplication and operating unit that originated the subledger transaction • Journal source and journal category that originated the journal

Transaction Currency

Reporting Currency

Primary Currency

50

Example: You receive an invoice for 1,00.00 UK Pounds (GBP) from an UK supplier. Your contract with the supplier was originally negotiated using prices in UK Pounds. The exchange rate used at the time of the agreement was 90 (1 UK Pound = 90 INR). This is also the rate specified on the invoice. Your organization uses corporate exchange rates to convert amounts to U.S. dollars for reporting purposes. Summary of related information: Transaction Currency GBP Primary Currency INR Reporting Currency USD User Specified Rate (GBP to INR) 90 Corporate Exchange Rate (INR to USD) .0217391304 Corporate Exchange Rate (GBP to USD) 1.8888880494 This is how the invoice will be converted: Transaction Amount 100.00 GBP Primary Amount 9000.00 (90 * 100 GBP) Reporting Amount 195.65 (0.02174 * 9000 INR)

51

Subledger Data for an AP Invoice when the Transaction currency differs

from the Primary and Reporting Currency and user specifies the rate:

Navigation:Navigation:Navigation:Navigation: Tools����View Accounting Primary SOB:

Reporting SOB:

52

Transaction Currency Same as Reporting Currency

The following diagram illustrates the conversion business rules that apply when the transaction currency is the same as the reporting currency: Same User Specified or EMU Fixed When the transaction and reporting currencies are the same, no conversion is needed to your reporting currency. MRC uses the transaction or journal amount as the reporting currency amount.

Transaction Currency

Reporting Currency

Primary Currency

53

What is the purpose of Inherit Checkbox in conversion options?

Leave the Inherit checkbox unmarked (the default option) to have MRC use the Default Reporting Conversion Type you specified above to determine the rate to use to convert the transaction currency amount to your reporting functional currency. Check the Inherit checkbox to have MRC inherit the conversion type used to determine the rate to convert the transaction currency amount to the primary functional currency. The same conversion rate type will be used to determine the rate to convert the transaction currency amount to your reporting functional currency. Note: This option only applies to transactions that originate in Oracle Payables, Receivables, Purchasing, and Global Accounting Engine. You can also select this option for General Ledger when defining your GL Conversion Rules. Example: You receive an invoice for 1,00.00 UK Pounds (GBP) from an UK supplier. Your contract with the supplier was originally negotiated using prices in UK Pounds. The default conversion rate type used by the Payables Application is Corporate and the exchange rate used at the time of the agreement was 85 (1 UK Pound = 85 INR). This is also the rate specified on the invoice. Your organization uses ‘Reporting’ exchange rates to convert amounts to U.S. dollars for reporting purposes. Summary of related information: Transaction Currency GBP Primary Currency INR Reporting Currency USD Default conversion rate type for Payables Reporting Corporate Rate (GBP to INR) 85 Reporting Exchange Rate (GBP to USD) 2.5 Corporate Rate (GBP to USD) as on (31-DEC-2004)

1.643

54

This is how the invoice will be converted when the Inherit check box is not enabled: Transaction Amount 100.00 GBP Primary Amount 8500.00 (85 * 100 GBP) Reporting Amount 250.00 (2.5 * 100 GBP)

This is how the invoice will be converted when the Inherit check box is enabled: Transaction Amount 100.00 GBP Primary Amount 8500.00 (85 * 100 GBP) Reporting Amount 164.30 (1.643 * 100 GBP)

Conversion Option for Payables Application: Navigation:Navigation:Navigation:Navigation: GL Responsibility����Setup����Financials����Books����Assign

55

Example for Inherit Option when check box is not checked: Navigation:Navigation:Navigation:Navigation: Tools����View Accounting Primary SOB:

Reporting SOB:

56

Example for Inherit Option when checkbox is checked: Navigation:Navigation:Navigation:Navigation: Tools����View Accounting Primary SOB:

Reporting SOB:

57

Revaluation:

If you use Multiple Reporting Currencies, you must periodically run Revaluation in your primary and reporting sets of books, as necessary to satisfy the accounting regulations of the country in which your organization operates. There are two methods for using revaluation with MRC:

• Don’t convert: gains and losses arising from revaluation in the primary set of books are NOT converted to your reporting currencies.

• Convert: gains and losses arising from revaluation in the primary set of books are converted to your reporting currencies

To convert revaluation gains and losses for a reporting set of books:

Create a GL conversion rule using these parameters: Convert checkbox: checked Category: Revaluation Source: Revaluation Reporting Conversion Type: choose the value you want No Rate Action: choose the value you want Note: A conversion rule with the Convert checkbox checked, a Category of Other, and a Source of Other will result in the same behavior.

If you choose not to convert revaluation for gains and losses, the process to revalue balances requires that you run Revaluation separately in your primary set of books and your reporting sets of books. You also post the resulting revaluation journals in both your primary and reporting sets of books. When the revaluation journal is posted in the primary set of books, there will be no impact on the reporting set of books.

This approach represents standard General Ledger functionality, operating independently in each set of books. You only need to run revaluation in a reporting set of books if there are foreign currencies entered transactions in that set of books.

58

GL Conversion Rules Navigation: Setup�Financials�Books�Assign Query the relevant Primary Set of Books and click on Conversion Options. Then place you cursor on General Ledger Application and click on GL Conversion Rules. In this setup the Source and Category has been defined as ‘Other’, ‘Other’. So, revaluation conversion will happen for the reporting set of books.

Screenshot of the Period rates:

59

The second revaluation method — to convert revaluation gains and losses—is explained below: Step 1: Revalue Primary Set of Books Run revaluation in your primary set of booksfor selected, foreign currencies. This process computes gains and losses from changes in exchange rates for account balances in your primary set of books that are denominated in a foreign currency. There is no immediate effect in the reporting set of books. This process generates revaluation journal entries by currency for the primary set of books. Note: If there are no foreign currencydenominated balances in the primary set of books, no revaluation journal entries are generated (there is nothing to revalue). Each revaluation journal includes:

• Lines to adjust the converted amounts of the foreign currency account balances, to reflect the exchange rate as of the balance sheet date.

• The amount needed to balance the journal is recorded as an entry to the exchange gain/loss account you select.

• Entered amounts are set to zero. Example: Primary Functional Currency INR Reporting Functional Currency USD Foreign Currency Accounts GBP

Date GBP to INR GBP to USD INR to USD 01-FEB-2005 85 1.8888880494 .0217391304 02-FEB-2005 73 1.7000000001 .023287671 Also assume that you defined a GL conversion rule to have revaluation journals converted using the rates for the reporting conversion type ”Corporate”. The related Period–Avg rate for Feb–2005 is .0133333333 (INR to GBP) and the Revaluation rate is 75 (GBP to INR) There are three transactions during September: Date Account Entered Accounted 02-FEB-2005 AR 150.00 GBP 10,950.00 INR 01-FEB-2005 AP 100.00 INR 100.00 INR 01-FEB-2005 AP 100.00 GBP 8,500.00 INR Screen shot showing the Payables Transaction Navigation:

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Inquiry�Account Query the relevant account for the period and click on Show Journal Details and then click on Drilldown

Screen shot showing the Receivables Transaction

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When Revaluation is run at the end of Feb’05, the new accounted amounts will be:

Date Account Entered Accounted 02-FEB-2005 AR 150.00 GBP 11,250.00 INR 01-FEB-2005 AP 100.00 INR 100.00 INR 01-FEB-2005 AP 100.00 GBP 7,500.00 INR

The effect of the revaluation is an increase in AR of 300.00 INR (a gain) and a decrease in AP of 1,000.00 INR (a gain). This will result in the following revaluation journal in the primary set of books: Account Receivable 300.00 Account Payable 1000.00 Exchange Gain/Loss 1300.00 The entered amounts for all three-journal lines are zero. We will continue to build on this example through the remaining discussion in this section. Screenshot of the revaluation journal created in Primary Set of Books:

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Step 2: In the primary set of books, post the revaluation journals generated by

Step1

• Upon posting, revaluation journals are converted to your reporting currencyin the reporting set of books.

• For the converted revaluation journals: The exchange gain or loss of the primary set of books’ revaluation journal is converted using the related rate for the reporting conversion type you specified for the applicable GL conversion rule. For example, assume you use the reporting conversion type ”Corporate” for your period average rates and you created the following GL conversion rule when you set up your reporting set of books: Convert checkbox: checked Category: Other Source: Other Reporting Conversion Type: Corporate If the primary functional currency is INR, the reporting functional currency is USD, and you run Revaluation for Feb’05, your revaluation journals will be converted using the Corporate rate you defined for Feb’05. The balancing amount of the reporting set of books’ revaluation journal is made to the Cumulative Translation Adjusment account. No adjustments are made to other balance sheet accounts. MRC automatically converts the primary set of book’s revaluation journal entries, balanced by balancing segment and cost center segments, to the reporting set of books. In the reporting set of books, instead of exactly replicating each line of the revaluation journal from the primary set of books, the revaluation journal is modified to consist of the unrealized gain/loss journal lines from the original revaluation journal, with offsetting lines against the cumulative adjustment account. The offsetting cumulative adjustment accounts (journal lines) are also balanced by balancing and cost center segments. A second revaluation needs to be generated from the reporting set of books to revalue the foreign currency denominated balances vis a vis the reporting currency, but in this case, the revaluation gain/loss account should be set to the CTA account. The difference between the primary and reporting set of books represents a translation adjustment, hence CTA is used as the offsetting account in both the revaluation JE propagated from the primary book, and the revaluation generated directly in the reporting set of books.

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Example: Continuing the example introduced in Step 1, the primary set of books’ revaluation journal will be converted to the reporting set of books as follows: Cumulative Translation Adjustment 30.28 Exchange Gain/Loss 30.28 The gain is computed as 30.28 (gain from primary set of book’s revaluation journal) times the ”Corporate” rate for Feb’05 - 0.023287671 (INR to USD): 1300.00 INR X 0.023287671(Latest Corporate rate for the month of Feb’06, in this case 02-Feb-2005) = US$ 30.28

Alternative computation for the Exchange gain/Loss: Convert the Functional currency to foreign currency value by diving the functional currency value by Revaluation rate for the period and then derive the rate of the foreign currency for the reporting set of books by dividing the revaluation rate for the foreign currency by the recent daily rate for the reporting currency.

• In this case the foreign currency value (GBP) would be 17.33333 (INR 1300/75-Revaluation rate for GBP transaction)

• Conversion Rate for Reporting SOB: GBP Rate 1.746575325 (75/42.9411769) • Multiply foreign currency value by the rate (17.33333 x 1.746575325)

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Step 3 Post Reporting Set of Books

In the reporting set of books, post the converted revaluation journals generated by Step 2. Screen shot of Revalution journal created in the Reporting set of books

Screenshot of the Daily rates for Feb’05

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Caution: Perform the remaining steps ONLY if the currency of the original entered amount in the primary set of books is different from the currency of the reporting set of books. Otherwise, no further action is needed in the reporting set of books. Example: In our continuing example, the currency of the original entered amount is GBP. The reporting currency is USD. Since the currencies are different, we would proceed with the remaining steps. Step 4: Revalue Reporting Set of Books

1. Run Revaluation in the reporting set of books if the currency of the original entered amount in the primary set of books is different from the currency of the reporting set of books. Choose to record any exchange gains or losses to the cumulative translation adjustment account.

2. This process computes gains and losses from changes in exchange rates for account balances in your reporting set of books that are denominated in a foreign currency (i.e., a currency other than the reporting currency).

3. This process generates revaluation journal entries by currency for the reporting set

of books. Each revaluation journal includes:

• Lines to adjust the converted amounts of the foreign currency account balances, to reflect the exchange rate as of the balance sheet date.

• The amount needed to balance the journal is recorded as an entry to the account you select. You should choose the cumulative translation adjustment account.

• Entered amounts are set to zero. Example: Continuing our example from the previous steps, note that MRC would have converted the three original transactions, using daily rates as follows: Date Account Entered Accounted 02-FEB-2005 AR 150.00 GBP 255.00 USD 01-FEB-2005 AP 300.00 INR 6.60 USD 01-FEB-2005 AP 100.00 GBP 188.90 USD

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Screen shot showing the Payables Transaction Navigation: Inquiry ����Account Query the relevant account for the period for currency GBP and click on Show Journal

Screen shot showing the Receivables Transaction – Query the INR Transaction

Since the original entered currency is different from USD, we must revalue these currencies as of Feb’05 end to compute any related translation adjustment.

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Screenshot showing the Payable INR Transaction

Since the original entered currency is different from USD, we must revalue these currencies as of Feb’05 end to compute any related translation adjustment. FAS-52: The FAS-52 rules require the financial statements of an overseas operation be converted to the parent company currency at the current rate in respect of all assets and liabilities. It can be achieved by running the revaluation program to execute a revision of the balances in the reporting set of books to reflect the current rates. The current revaluation program revalues from the entered/transaction currency to the set of books currency for both primary and reporting sets of books. However, this calculation may result in a material difference for FAS-52 Translation for non-monetary balances. The profile option ‘GL/MRC Revaluation: Use Primary Currency Instead of Entered Currency’ would help in achieving the results: The following values are available to you: Yes: The Revaluation program will use the functional currency balances of the primary book to create revaluation entries for the reporting set of books.

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No: The Revaluation program will use the entered currency balances in the reporting set of books to create the revaluation entries for the reporting set of books. The default value for this profile option is No. You can only view this profile option at the user level. Your System Administrator must set this profile option at the site, application, or responsibility level. Note: This profile option is applicable only for the Reporting SOB. For our example we will set the profile option ‘GL/MRC Revaluation: Use Primary Currency Instead of Entered Currency’ to ‘Yes’ at the Responsibility level. The exchange rate used for the transaction is 0.0210526316 (USD to INR Revaluation rate). The revaluation program will create two journals. Screen shot of the Revaluation run output:

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Period Rates:

For the GBP Transaction, the effect of the revaluation is a decrease in AR of $18.16 and a decrease in AP of 31.00 and a net credit of $12.84 to the Exchange Gain/Loss account. This will result in the following revaluation journal in the reporting set of books: Account Receivable 18.16 Account Payable 31.00 Exchange Gain/Loss 12.84 The entered amounts for all three-journal lines are zero. When Revaluation is run, the new accounting amounts in the reporting set of books for GBP Transactions: Date Accnt Entered

Currency (GBP)

Primary SOB Balance (INR)

Reval Rate

Reval Bal (USD)

RSOB Bal (USD)

Difference (RSOB Bal – Reval Bal) USD

01-FEB-05 AP 100.00 7500.00 0.021053 157.90 188.90 31.00 02-FEB-05 AR 150.00 11250.00 0.021053 236.84 255.00 18.16

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GBP Transaction

For the INR Transaction, the effect of the revaluation is a decrease in AR of $2.30 and a decrease in AP of 0.28 and a net debit of $2.02 to the Exchange Gain/Loss account. This will result in the following revaluation journal in the reporting set of books: Account Receivable 2.30 Account Payable 0.28 Exchange Gain/Loss 2.02 The entered amounts for all three-journal lines are zero. When Revaluation is run, the new accounting amounts in the reporting set of books for INR Transactions: Date Accnt Entered

Currency (INR)

Primary SOB Balance (INR)

Reval Rate

Reval Bal (USD)

RSOB Bal (USD)

Difference (RSOB Bal – Reval Bal) USD

01-FEB-05 AP 300.00 300.00 0.021053 6.32 6.60 0.28 Jan’05 AR 2000.00 2000.00 0.021053 42.10 44.40 2.30

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INR Transaction

Step 5 Post Reporting Sets of Books

In the reporting set of books, post the revaluation journals generated by Step 4.

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Useful References:

1. Note.136028.1: General Ledger MRC-FAQ 2. Note.197606.1: MRC Multiple Reporting Currencies FAQ

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White Paper Title [May] 2006 Author: Vaideeswaran Subramanian, ISC. Contributing Authors: Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 www.oracle.com Oracle is a registered trademark of Oracle Corporat ion. Various product and service names referenced herein may be trademarks of Oracle Corporation. All other product and servic e names mentioned may be trademarks of their respective own ers. Copyright © 2001 Oracle Corporation All rights reserved.