multiperiod accounting in oracle ebs r12
DESCRIPTION
A deep dive into the Multiperiod Accounting functionality using Subledger Accounting configurations in Oracle EBS R12TRANSCRIPT
R12 Subledger Accounting Cookbook
Multi Period Accounting
NCOAUG Training Day
August 14, 2014
Prepared by:Prithis DasDynamique Solutions LLC
Presenter’s background
■ Oracle Applications experience goes back to 1997■ Over 22 years of business process improvement experience■ Consulting experience with Big 5 and other major
organizations■ Oracle Certified Specialist in General Ledger■ Chartered Accountant and Management Accountant from
India■ Authored and presented papers on SLA, WebADI, Reports
Manager and other topics at several OAUG and local events■ Just completed a major R12 upgrade and working on a Cash
Basis Secondary Ledger implementation■ Contact:
▪ Cell: 630.3649457
▪ Email: [email protected]
▪ Web: Dynamiquesolutionsllc.com
Copyright Prithis DasDynamique Solutions LLC
Agenda
■ Introduction to Multi Period Accounting■ Typical Prepayment Process■ Prepayment Scenario■ Multiperiod Accounting Setups – Optional Setups■ SLA Setups for Multiperiod Accounting■ Transaction Processing using MPA■ Implementation Considerations■ References■ Q&A
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Introduction to Multi Period Accounting
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■ What is Multiperiod Accounting?▪ Multiperiod accounting enables users to create accounting for a
single accounting event for more than one GL period. The functionality is primarily used to recognize revenue or a prepaid expense or revenue across multiple GL periods.
■ Uses of Multiperiod Accounting▪ Automated recognition of Prepaid AP invoices
▪ AR Revenue recognition
▪ Can be used in Primary as well as Secondary Ledgers (for Management reporting)
■ This presentation focuses on recognizing prepaid expenses across multiple GL periods.
IntroductionCopyright Prithis DasDynamique Solutions LLC
Typical Prepayment Process
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■ Typical Prepayment process without Multiperiod Accounting▪ Setup/maintain Special Calendar
▪ Setup Distribution Set
▪ Create Prepayment invoice
▪ Pay Prepayment invoice
▪ Create Recurring invoice template for expense amortizations
▪ Generate Recurring invoices
▪ Apply to Prepayment Invoice each month – manual process
▪ Run Create Accounting/Transfer to GL
▪ Use Prepayment Status Report.
Typical Prepayment ProcessCopyright Prithis DasDynamique Solutions LLC
■ Typical Prepayment process with Multiperiod Accounting▪ Setup Multiperiod Accounting in Subledger Accounting
▪ Create Standard invoice— Complete Deferred fields during invoice entry
▪ Pay Standard invoice to pay the prepayment
▪ Run Create Accounting/Transfer to GL
▪ Use Multiperiod Accounting and Accrual Reversal Report
▪ Periodically run Complete Multiperiod Accounting program
Typical Prepayment ProcessCopyright Prithis DasDynamique Solutions LLC
Prepayment ScenarioCopyright Prithis DasDynamique Solutions LLC
■ Prepayment for Software Support▪ A company prepays annual software maintenance of $12,000
on June 25th , 2014. The company needs to expense $1,000 each month for 12 months according to the following schedule:
Scenario
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Period Amount Period Amount
Jul-14 $1,000 Jan-15 $1,000
Aug-14 $1,000 Feb-15 $1,000
Sep-14 $1,000 Mar-15 $1,000
Oct-14 $1,000 Apr-15 $1,000
Nov-14 $1,000 May-15 $1,000
Dec-14 $1,000 Jun-15 $1,000
■ Expected journal entries in Jun-14
■ Expected journal entries Jul-14 to Jun-15
Scenario
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Period Journal Period Amount
Jul-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jan-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Aug-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Feb-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Sep-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Mar-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Oct-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Apr-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Nov-14 Dr Expense $1,000Cr Prepaid Expenses $1000
May-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Dec-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jun-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Period Journal Period Journal
Jun-14 Dr Prepaid Expense $12,000Cr AP Liability $12,000
Jun-14 Dr AP Liability $12,000Cr Bank $12,000
Multiperiod Accounting SetupsCopyright Prithis DasDynamique Solutions LLC
■ Optional Setups – likely to be different for each implementation, based on design▪ Value Set for Prepayment Type
— Create Values for the Value Set
▪ Descriptive Flexfield— Invoice Lines DFF
■ Subledger Accounting Setups – likely to be similar for all implementations▪ Mapping Set
▪ Account Derivation Rule
▪ Journal Line Types
▪ Journal Line Definition
▪ Application Accounting Definition
▪ Subledger Accounting Method
▪ Ledger
Multiperiod Accounting Setups
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■ Value Set for Prepayment Type
Multiperiod Accounting Setups
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■ Enter Values in Value Set for Prepayment Type■ You can enter values for:
▪ Specific types of Prepayments
▪ Specific Vendors
Multiperiod Accounting Setups
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■ Descriptive Flexfield▪ Invoice Lines DFF
Multiperiod Accounting Setups
You do not have to make this DFF context sensitive. You can make this Global.
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■ Descriptive Flexfield▪ Invoice Lines DFF
▪ Assign the Value Set created in the earlier step
Multiperiod Accounting Setups
In this demo we have selected ATTRIBUTE15. Typically you would start at ATTRIBUTE1 if available.
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■ Descriptive Flexfield▪ Invoice Lines DFF
Multiperiod Accounting Setups
You must uncheck Required checkbox as not all invoices are Prepayments.
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Subledger Accounting Setups for MPA
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Application Accounting Definition
Subledger Accounting Setups for MPA
Mapping Set
Account Derivation Rule
Journal Line Type
Journal Line Definition
Subledger Accounting Method
Ledger
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Subledger Accounting Setups for MPA
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■ Navigation Paths from Payables Manager Responsibility▪ Mapping Set
▪ Account Derivation Rule
▪ Journal Line Type
▪ Journal Line Definition
▪ Application Accounting Definition
▪ Subledger Accounting Method
▪ Ledger
■ Mapping Set
Subledger Accounting Setups for MPA
Field Data
Mapping Set Code XXPD_MPA_EXP_CCID
Mapping Set Name XXPD MPA ACCRUAL EXPENSE CCID
Mapping Set Description
XXPD Multi-Period Accounting Invoices - Amortization Expense Account
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Mapping Set ADR JLT JLD AAD SLAM Ledger
Link the Mapping Set to the Value Set created earlier
For each Input Value, enter the Output Value: Enter the target Expense account for amortization
■ Account Derivation Rule
Subledger Accounting Setups for MPA
Field Data
Rule Code XXPD_MPA_EXP_FLEX
Rule Name XXPD MPA Prepaid to Expense Account Flexfield
Description XXPD MPA Prepaid to Expense Account Flexfield
Assign the Mapping Set = XXPD MPA ACCRUAL EXPENSE CCID created earlier.Input Source = Invoice Line Flexfield Segment 15
Will receive a Warning on save
There is no need to assign a Condition
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Type - Accrual
Subledger Accounting Setups for MPA
Field Data
Line Type Code XXPD_AP_ITEM_EXP_INV_MPA_ACC
Name XXPD Multi Period Accounting and Regular Item Expense Accrual
Description XXPD Multi Period Accounting and Regular Item Expense Accrual, replaces “Item Expense” JLT
For the accrual journal line type, set the Multiperiod option to 'Accrual'
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Type - Recognition
Subledger Accounting Setups for MPA
Field Data
Line Type Code XXSL_AP_ITEM_EXP_INV_MPA_RECOG
Name XXPD Multi Period Accounting Item Expense Recognition
Description XXPD Multi Period Accounting Item Expense Recognition
For the recognition journal line type, set the Multiperiod option to 'Recognition'.
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Type – Accrual – Assign Sources
Subledger Accounting Setups for MPA
Assign sources to the following accounting attributes for the accrual journal line type
Multiperiod Start Date
Determines the accounting period and accounting date for the first recognition journal entry
Multiperiod End Date
Determines the accounting period and accounting date for the last recognition journal entry
Multiperiod Option
Determines whether multiperiod or single period accounting to be generated for an accounting event
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Definition▪ Retrieve and Copy the seeded JLD “Accrual, Invoices All”.
Subledger Accounting Setups for MPA
Field Data
Definition Code XXSL_AP_ITEM_EXP_INV_MPA_RECOG
Definition Name XXPD Accrual, Invoices All
Description XXPD Oracle Payables Accrual Accounting Definition (All)
Copyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Definition (User owned)▪ Copy the seeded Line Assignment “Item Expense” to a new
Assignment “XXPD Multi Period Accounting and Regular Item Expense Accrual”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Definition (User owned)▪ Inactivate the seeded line assignment “Item Expense”
▪ Assign new JLT “XXPD Multi Period Accounting and Regular Item Expense Accrual”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Definition (User owned)▪ Assign the seeded Account Derivation Rule “Invoice Distribution
Account” to All Segments
▪ Assign a Line Description (custom JLD in this example)
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Journal Line Definition (User owned)▪ The Multiperiod Accounting button will be enabled for this
Journal Line Type
▪ Click on the Multiperiod Accounting button
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Multiperiod Accounting Assignment▪ Options
— Number of Journal Entries
— GL Dates
— Proration Type
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Multiperiod Accounting Assignment Options
■ Source: Oracle Subledger Accounting Implementation Guide
Subledger Accounting Setups for MPA
Number of Journal Entries: Number of multiperiod journal entries to be createdOne One multiperiod journal entry is created to
recognize the entire accrual amount.Note: If this option is selected, it is not possible to select a proration type since only one journal entry is created for the entire accrual amount.
One per GL Period
One multiperiod journal entry is created per GL period between the dates defined by the multiperiod start and end date accounting attributes.
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Multiperiod Accounting Assignment Options
■ Source: Oracle Subledger Accounting Implementation Guide
Subledger Accounting Setups for MPA
GL Dates: Specifies when the multiperiod journal entries are created inthe GL periodFirst Day GL Period
Multiperiod journal entries have a GL date of the first day of the periodExample: 1-Oct-2014
Last Day GL Period:
Multiperiod journal entries have a GL date of the last day of the period.Example: 31-Oct-2014
Originating Day
Multiperiod entries have the same GL date as the originating journal entry.Example: 22-Oct-2014If Originating Day is 31-Oct, the next multiperiod JE will have a date of 30-Nov.
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Multiperiod Accounting Assignment Options▪ See Document 1915795.1 on My Oracle Support for worked out
examples for each Proration Type
■ Source: Oracle Subledger Accounting Implementation Guide
Subledger Accounting Setups for MPA
Proration Type: Specifies how the recognition amount per period should becalculated360 days Partial periods calculated by assuming 360 days in a year
Days in Period Partial periods calculated by dividing the number of partial period days by the actual number of days in the period
First Period Accrual amount divided by the number of periods and recognized evenly starting with the first period
Total Days in Period
Both the partial periods and the whole periods are based on the actual number of days in the period. The number of days within each period is then divided by the total number of days in the whole multi accounting period. The result is then multiplied by the total amount due to arrive at an amount for each respective period.
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Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Multiperiod Accounting Assignment options
Click on the Line Assignments button
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Line Assignments▪ For the Accrual Journal Line Type
— All Segments will use the seeded ADR “Invoice Distribution Account”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Line Assignments▪ For the Recognition Journal Line Type
— All Segments will use the custom ADR “XXPD MPA Prepaid to Expense Account Flexfield”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Application Accounting Definition▪ Copy the seeded AAD “Accrual Basis” to a custom AAD “XXPD
Accrual Basis”
▪ Replace the seeded JLD Assignment XXPD Accrual, Invoices All to the custom JLD “XXPD Accrual, Invoices All”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
Validate the Application Accounting Definition
■ Subledger Accounting Methods▪ Copy the seeded SLAM “Standard Accrual” to a custom SLAM
“XXPD Standard Accrual”
▪ Replace the seeded AAD Assignment Accrual Basis to the custom AAD Assignment “XXPD Accrual Basis”
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
■ Subledger Accounting Methods▪ Replace the SLAM “Standard Accrual” with the custom SLAM
“XXPD Standard Accrual” in your Primary Ledger
Subledger Accounting Setups for MPACopyright Prithis DasDynamique Solutions LLC
Mapping Set ADR JLT JLD AAD SLAM Ledger
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Enter a Standard Invoice for Prepaid Software Maintenance▪ Invoice Type is Standard and not Prepayment
▪ Say Invoice Date is 15th June, it was entered on 25th June
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ At the Line level▪ Enter a Prepayment Distribution account
▪ Check the Deferred Option checkbox
▪ Enter the Deferred Start Date and Deferred End Date fields
▪ Enter the Prepayment Type (select from LOV) in the DFF
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Create Accounting▪ Validate the Invoice, then run Create Accounting
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Create Accounting will spawn:▪ Accounting Program
▪ Journal Import
▪ Subledger Accounting Balances Update
▪ Subledger Multiperiod Accounting and Accrual Reversal Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ If Create Accounting and Account Program completes with a yellow Warning or red Error, STOP!▪ Review the report to identify and troubleshoot the problem
▪ Common causes for Create Accounting to Fail:— The Application Accounting Definition was not validated (in this case
the Create Accounting program completes in a red error)
— The DFF at the Line level was not used. In this example the Prepayment Type drives the Recognition accounting. So in the absence of this information on the DFF the Accounting will fail
— The General Ledger period was not open
— Cross-validation or Security Rules were violated
— Account Combination was disabled
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Create Accounting▪ Will generate the Subledger Accounting Program Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Subledger Multiperiod Accounting and Accrual Reversal Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Subledger Multiperiod Accounting and Accrual Reversal Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Subledger Multiperiod Accounting and Accrual Reversal Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Subledger Multiperiod Accounting and Accrual Reversal Report
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ GL Journal Entry
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Expected journal entries in Jun-14
■ Expected journal entries Jul-14 to Jun-15
Transaction Processing for MPA
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Period Journal Period Amount
Jul-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jan-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Aug-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Feb-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Sep-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Mar-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Oct-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Apr-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Nov-14 Dr Expense $1,000Cr Prepaid Expenses $1000
May-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Dec-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jun-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Period Journal Period Journal
Jun-14 Dr Prepaid Expense $12,000Cr AP Liability $12,000
Jun-14 Dr AP Liability $12,000Cr Bank $12,000
■ “Complete Multiperiod Accounting” concurrent program▪ Run in subsequent months from Jul-14 to Jun-15
▪ Schedule this program to run automatically
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Complete Multiperiod Accounting concurrent program▪ Creates journal entries for Expense Recognition for the period it
is run
▪ Provides a report for the Multiperiod Journal Entries for that period
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Complete Multiperiod Accounting concurrent program
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Complete Multiperiod Accounting concurrent program
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ GL Journal Entry in each subsequent period through Jun-15
Transaction Processing for MPACopyright Prithis DasDynamique Solutions LLC
■ Expected journal entries in Jun-14
■ Expected journal entries Jul-14 to Jun-15
Transaction Processing for MPA
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Period Journal Period Amount
Jul-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jan-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Aug-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Feb-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Sep-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Mar-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Oct-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Apr-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Nov-14 Dr Expense $1,000Cr Prepaid Expenses $1000
May-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Dec-14 Dr Expense $1,000Cr Prepaid Expenses $1000
Jun-15 Dr Expense $1,000Cr Prepaid Expenses $1000
Period Journal Period Journal
Jun-14 Dr Prepaid Expense $12,000Cr AP Liability $12,000
Jun-14 Dr AP Liability $12,000Cr Bank $12,000
Implementation ConsiderationsCopyright Prithis DasDynamique Solutions LLC
■ Enhancement possibilities▪ Use a DFF for Prepayment Type and a Mapping Set to drive the
expense account (as shown in this example)
▪ Alternately, use the Prepayment Account on the invoice to drive the Expense account using a Mapping Set
■ Invoice having regular expense or Asset purchase in addition to Prepayment expense▪ Use Deferred option fields only for those lines which are
prepayment in nature
■ What if Prepaid Invoice is already paid outside Oracle▪ Can enter Invoice in Oracle and set Deferred start and end
dates. System will take care of the rest and account correctly
Implementation Considerations
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■ Existing open Prepayments when MPA is implemented▪ There is no way to “convert” Prepayment invoices to Standard
invoices using MPA. Process Prepayment invoices as usual till they are closed.
■ If the journal effective date of a journal imported from the Subledger defaults to the last date of the period, you will have to adjust the “summarization” Subledger Accounting Options for the Ledger
■ Critical patches released for Multiperiod Accounting in SLA▪ 7109881, 8505463, 8635648, 8664504, 9954676, 9162117,
10394715, 11654120, 13023651 and 13415216.
▪ Patch 13018752:R12.XLA.B is recommended for Proration Type “First Period” amounts fix
Implementation Considerations
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■ Do we need two accrual journal line types to achieve single period accounting and multiperiod accounting?▪ No, two separate accrual journal line types are not required.
▪ With the same accrual journal line type, single period and multiperiod accounting can be created.
▪ Whether multiperiod or single period accounting is to be created for a transaction is determined based on the value passed for the Multiperiod Option accounting attribute.
▪ If the value passed is 'Y' then multiperiod accounting is created. If the value passed is 'N' or null then single period accounting is created.
■ No changes in MPA functionality from 12.1.3 to 12.2 as of today
Implementation Considerations
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ReferencesCopyright Prithis DasDynamique Solutions LLC
References
■ Oracle Subledger Accounting Implementation Guide (E13628-04)
■ Document 1399611.1 on My Oracle Support▪ Out-dated information (12.1.2), but useful for basic setups
■ Document 1915795.1 for 12.1.3 on My Oracle Support▪ Most current document (Aug-2014)
▪ Gives explanation of Proration Type options with examples
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