consolidations and eliminations in ax2012

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Consolidations and Eliminations in AX2012

11 September 2014Dan McAllister


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

Copyright © AXMentor 2014


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.



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




US $ Parent US $ Subsidiary EU € Subsidiary EU € Subsidiary

Operating Company

Non-Operating Company




US $ Parent US $ Subsidiary

US $ Consolidation

EU € Subsidiary EU € Subsidiary

EU € Consolidation

Operating Company






US $ Consolidation

US $ Elimination



EU € Elimination

Operating Company






US $ Consolidation

US $ Elimination



EU € Elimination

Global $ Consolidation

Global $/€Elimination

Operating Company




Consolidations - OverviewSelect:

• Account # Range

• Transaction Date Range

• Companies (% Share)

• Exchange Rate Definitions

• Considerations for hierarchy, eliminations


US $ Consolidation

US $ Elimination



EU € Elimination



Operating Company




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.



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



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



Consolidations - Review

• Review• Trial Balance

• AX Financial Statements

• Other reporting tools

• Reapply consolidations if required• GL Inquiries Consolidations Remove Transactions

• Re-Run Consolidation



Eliminations

• Overview

• Setup Steps

• Processing Steps

• Review/Posting



Eliminations - Overview

Why Elimination Companies?

• Currency Translation

• Reporting


US $ Consolidation

US $ Elimination



EU € Elimination






(US Parent) (EU Subsidiary) (Elimination) (Consolidation)

USMF DEMF ELIM GLMF110110

110130

110160

130100

130300

133300

133500

140100

140200

150100




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



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.



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



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



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)



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



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



Consolidate using Management Reporter – Month 1



Consolidate using Management Reporter – Column Definition Setup



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



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.



Consolidations and Eliminations

• This presentation and additional training material available online

• Any further questions:Dan McAllister, [email protected]


consolidations and eliminations in ax2012

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