AP - Prepayment Process With Multiperiod Accounting

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R12 Subledger Accounting Cookbook

Multi Period Accounting
NCOAUG Training Day

August 14, 2014
Prepared by:
Prithis Das
Dynamique Solutions LLC REMINDER
Check in on the COLLABORATE
mobile app
Copyright Prithis Das
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Dynamique 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: Prithis.das@dynamiquesolutionsllc.com
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▪ Web: Dynamiquesolutionsllc.com
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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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Introduction
■ 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.
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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.
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■ 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
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Prepayment Scenario
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Scenario
■ 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:
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
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Scenario
■ Expected journal entries in Jun-14

Period Journal Period Journal
Jun-14 Dr Prepaid Expense $12,000 Jun-14 Dr AP Liability $12,000
Cr AP Liability $12,000 Cr Bank $12,000
■ Expected journal entries Jul-14 to Jun-15

Period Journal Period Amount
Jul-14 Dr Expense $1,000 Jan-15 Dr Expense $1,000
Cr Prepaid Expenses $1000 Cr Prepaid Expenses $1000
Aug-14 Dr Expense $1,000 Feb-15 Dr Expense $1,000

Sep-14 Dr Expense $1,000 Mar-15 Dr Expense $1,000

Oct-14 Dr Expense $1,000 Apr-15 Dr Expense $1,000

Nov-14 Dr Expense $1,000 May-15 Dr Expense $1,000

Dec-14 Dr Expense $1,000 Jun-15 Dr Expense $1,000

Cr Prepaid Expenses $1000 Cr Prepaid Expenses $1000 11
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Multiperiod Accounting Setups
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■ 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 13
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■ Value Set for Prepayment Type
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■ Enter Values in Value Set for Prepayment Type

■ You can enter values for:
▪ Specific types of Prepayments
▪ Specific Vendors
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■ Descriptive Flexfield
▪ Invoice Lines DFF
You do not have to

make this DFF
context sensitive.
You can make this
Global.
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▪ Assign the Value Set created in the earlier step
In this demo we have

selected
ATTRIBUTE15.
Typically you would
start at ATTRIBUTE1 if
available.
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You must uncheck

Required checkbox as
not all invoices are
Prepayments.
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Subledger Accounting Setups for MPA
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Mapping Set
Account Derivation Rule
Journal Line Type
Journal Line Definition
Application Accounting Definition
Subledger Accounting Method
Ledger 20
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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
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Mapping
ADR JLT JLD AAD SLAM Ledger
Set
■ Mapping Set
Field Data
Mapping Set Code XXPD_MPA_EXP_CCID
Mapping Set Name XXPD MPA ACCRUAL EXPENSE CCID
Mapping Set XXPD Multi-Period Accounting Invoices - Amortization
Description Expense Account
Link the Mapping Set

to the Value Set
created earlier
For each Input Value,

enter the Output
Value: Enter the
target Expense
account for
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Mapping
Set
■ Account Derivation Rule
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
There is no need to
assign a Condition
Will receive a
Warning on save 23
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Mapping
Set
■ Journal Line Type - Accrual
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
■ Journal Line Type - Recognition
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
■ Journal Line Type – Accrual – Assign Sources
Assign sources to the following accounting attributes for the accrual journal line type
Multiperiod Start Determines the accounting period and accounting date for the first
Date recognition journal entry
Multiperiod End Determines the accounting period and accounting date for the last
Date recognition journal entry
Multiperiod Determines whether multiperiod or single period accounting to be
Option generated for an accounting event
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Mapping
Set
■ Journal Line Definition
▪ Retrieve and Copy the seeded JLD “Accrual, Invoices All”.
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)
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Mapping
Set
■ 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”
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Mapping
Set
▪ Inactivate the seeded line assignment “Item Expense”
▪ Assign new JLT “XXPD Multi Period Accounting and Regular
Item Expense Accrual”
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Mapping
Set
▪ Assign the seeded Account Derivation Rule “Invoice Distribution
Account” to All Segments
▪ Assign a Line Description (custom JLD in this example)
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Mapping
Set
▪ The Multiperiod Accounting button will be enabled for this
Journal Line Type
▪ Click on the Multiperiod Accounting button
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Mapping
Set
■ Multiperiod Accounting Assignment
▪ Options
— Number of Journal Entries
— GL Dates
— Proration Type
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Mapping
Set
■ Multiperiod Accounting Assignment Options
Number of Journal Entries: Number of multiperiod journal entries to be
created
One 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 One multiperiod journal entry is created per GL period
Period between the dates defined by the multiperiod start and end
date accounting attributes.
■ Source: Oracle Subledger Accounting Implementation Guide
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Mapping
Set
GL Dates: Specifies when the multiperiod journal entries are created in
the GL period
First Day GL Multiperiod journal entries have a GL date of the first day of
Period the period
Example: 1-Oct-2014
Last Day GL Multiperiod journal entries have a GL date of the last day of
Period: the period.
Example: 31-Oct-2014
Originating Multiperiod entries have the same GL date as the originating
Day journal entry.
Example: 22-Oct-2014
If Originating Day is 31-Oct, the next multiperiod JE will have a
date of 30-Nov.
■ Source: Oracle Subledger Accounting Implementation Guide
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Mapping
Set
▪ See Document 1915795.1 on My Oracle Support for worked out
examples for each Proration Type
Proration Type: Specifies how the recognition amount per period should be
calculated
360 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 Both the partial periods and the whole periods are based on
Period 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.
■ Source: Oracle Subledger Accounting Implementation Guide 35

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Mapping
Set
■ Multiperiod Accounting Assignment options
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Mapping
Set
■ Line Assignments
▪ For the Accrual Journal Line Type
— All Segments will use the seeded ADR “Invoice Distribution Account”
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Mapping
Set
■ Line Assignments
▪ For the Recognition Journal Line Type
— All Segments will use the custom ADR “XXPD MPA Prepaid to Expense
Account Flexfield”
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Mapping
Set
■ 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”
Validate the
Application
Accounting
Definition
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Mapping
Set
■ 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”
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Mapping
Set
■ Subledger Accounting Methods
▪ Replace the SLAM “Standard Accrual” with the custom SLAM
“XXPD Standard Accrual” in your Primary Ledger
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Transaction Processing for MPA
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■ 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
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■ 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
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■ Create Accounting
▪ Validate the Invoice, then run Create Accounting
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■ Create Accounting will spawn:

▪ Accounting Program
▪ Journal Import
▪ Subledger Accounting Balances Update
▪ Subledger Multiperiod Accounting and Accrual Reversal Report
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■ 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
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■ Create Accounting
▪ Will generate the Subledger Accounting Program Report
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■ Subledger Multiperiod Accounting and Accrual Reversal

Report
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Report
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Report
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Report
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■ GL Journal Entry
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■ “Complete Multiperiod Accounting” concurrent program

▪ Run in subsequent months from Jul-14 to Jun-15
▪ Schedule this program to run automatically
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■ 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
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■ GL Journal Entry in each subsequent period through Jun-15
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Implementation Considerations
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■ 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
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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
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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
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References
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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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Q&A
Additional questions?
• Contact
Email
Prithis.Das@dynamiquesolutionsllc.com
Cell
630.3649457
Website
Dynamiquesolutionsllc.com
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R12 Subledger Accounting Cookbook

NCOAUG Training Day

■ Oracle Applications experience goes back to 1997

■ Introduction to Multi Period Accounting

Multi Period Accounting

■ What is Multiperiod Accounting?

Typical Prepayment Process

■ Typical Prepayment process without Multiperiod Accounting

Typical Prepayment Process

■ Typical Prepayment process with Multiperiod Accounting

■ Prepayment for Software Support

Period Amount Period Amount

■ Expected journal entries in Jun-14

■ Expected journal entries Jul-14 to Jun-15

Aug-14 Dr Expense $1,000 Feb-15 Dr Expense $1,000

Sep-14 Dr Expense $1,000 Mar-15 Dr Expense $1,000

Oct-14 Dr Expense $1,000 Apr-15 Dr Expense $1,000

Nov-14 Dr Expense $1,000 May-15 Dr Expense $1,000

Dec-14 Dr Expense $1,000 Jun-15 Dr Expense $1,000

Multiperiod Accounting Setups

Multiperiod Accounting Setups

Multiperiod Accounting Setups

■ Value Set for Prepayment Type

Multiperiod Accounting Setups

■ Enter Values in Value Set for Prepayment Type

Multiperiod Accounting Setups

You do not have to

Multiperiod Accounting Setups

In this demo we have

Multiperiod Accounting Setups

You must uncheck

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Account Derivation Rule

Journal Line Type

Journal Line Definition

Application Accounting Definition

Subledger Accounting Method

Subledger Accounting Setups for MPA

▪ Account Derivation Rule

▪ Journal Line Type

▪ Journal Line Definition

▪ Application Accounting Definition

▪ Subledger Accounting Method

Subledger Accounting Setups for MPA

Link the Mapping Set

For each Input Value,

Subledger Accounting Setups for MPA

Assign the Mapping

For the accrual journal

Subledger Accounting Setups for MPA

For the recognition

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

Subledger Accounting Setups for MPA

■ Source: Oracle Subledger Accounting Implementation Guide

Subledger Accounting Setups for MPA