Multiperiod Accounting in Oracle Fusion ERP Cloud
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This presentation discusses multi-period accounting in Oracle ERP Cloud. It begins with an introduction to multi-period accounting and how it is used to recognize expenses or revenue across multiple periods. It then provides two scenarios: prorating by periods, which requires no setup, and prorating by days, which requires custom journal line rule and accounting method setups. The presentation concludes with implementation considerations for multi-period accounting.
Multiperiod Accounting in Oracle Fusion ERP Cloud
- 1. Multi Period Accounting in Oracle ERP/Fusion Cloud Prithis Das – Dynamique Solutions LLC
- 2. Presenter’s background - Prithis Das • In the Oracle ERP space since 1997 • Founder of Dynamique Solutions LLC, an Oracle Silver Partner – Cloud Standard • Consulting experience with Big 5 and other major organizations • Oracle Certified Specialist in all the Oracle ERP Cloud Financials modules • Oracle Certified Specialist in Oracle E-Business Suite Financials modules • Chartered Accountant and Management Accountant from India • Multiple presentations on Oracle technologies at major Oracle events • Contact: • Cell: +1.630.3649457 • Email: [email protected] • LinkedIn: www.linkedin.com/in/prithisdas/ • Web: www.dynamique.us Dynamique Solutions LLC
- 4. Agenda • Introduction to Multi Period Accounting • Multiperiod Accounting Scenario - Prorate by Periods • Multiperiod Accounting Setups - Prorate by Days • Multiperiod Accounting - Setups for Proration by Days • Implementation Considerations • Q&A Dynamique Solutions LLC
- 5. INTRODUCTION TO MULTI PERIOD ACCOUNTING Oracle ERP Cloud | Release 13 Dynamique Solutions LLC
- 6. Introduction to Multi Period Accounting (MPA) Dynamique Solutions LLC • What is Multiperiod Accounting? • Multiperiod accounting (MPA) 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. • How is Multiperiod Accounting used? • Automated amortization of Prepaid AP invoices • This presentation focuses on amortization of prepaid expenses across multiple accounting periods.
- 7. Typical Prepayment Process without MPA Dynamique Solutions LLC • Typical Prepayment process without Multiperiod Accounting • Setup/maintain Special Calendar • Setup Distribution Set • Create Prepayment invoice • Pay Prepayment invoice • Create Recurring invoice template for monthly expense amortizations • Generate Recurring invoices • Apply to Prepayment Invoice each month – manual process • Run Create Accounting/Transfer to GL • Use Prepayment Status Report. • Optionally use Manual/Recurring Journal Entries to amortize prepaid expenses.
- 8. The new Multi Period Accounting Process Dynamique Solutions LLC • The Multiperiod Accounting process • Create Standard invoice in Accounts Payable • Make Multi Period Accounting tab visible at the Lines level of the invoice (one-time task) • Complete Deferred fields during invoice entry • Pay Standard invoice to pay the prepayment • Run Create Accounting/Transfer to GL • Periodically run Complete Multiperiod Accounting program • The MPA functionality in Release 12 and 13 supports two scenarios • Prorate by number of periods - Default setting, no setups are required • Prorate by days - Configurable, custom Subledger Accounting setups are required
- 9. MULTIPERIOD ACCOUNTING SCENARIO – PRORATE BY PERIODS Oracle ERP Cloud | Release 12 and 13 Dynamique Solutions LLC
- 10. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Period Amount Period Amount Oct-17 $1,000 Apr-18 $1,000 Nov-17 $1,000 May-18 $1,000 Dec-17 $1,000 Jun-18 $1,000 Jan-18 $1,000 Jul-18 $1,000 Feb-18 $1,000 Aug-18 $1,000 Mar-18 $1,000 Sep-18 $1,000 • Prepayment for Software Support • A company prepays annual software support of $12,000 on October 28th , 2017. • The support contract is from October 15th, 2017 to October 14th 2018. • The company needs to expense $1,000 each month for 12 months according to the following schedule:
- 11. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC • Expected journal entries in Oct-17 Period Journal Period Journal Oct-17 Dr Prepaid Expense $12,000 Cr AP Liability $12,000 Oct-17 Dr AP Liability $12,000 Cr Bank $12,000 • Expected journal entries for Deferred Expenses Oct-17 to Sep-18 Period Journal Period Amount Oct-17 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Apr-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Nov-17 Dr Expense $1,000 Cr Prepaid Expenses $1,000 May-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Dec-17 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Jun-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Jan-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Jul-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Feb-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Aug-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Mar-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000 Sep-18 Dr Expense $1,000 Cr Prepaid Expenses $1,000
- 12. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Proration Formula used
- 13. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Invoice entry with MPA Enter the Expense Distribution Set / Combination
- 14. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC
- 15. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Enable the MPA fields
- 16. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Enable the MPA information
- 17. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Create Accounting
- 18. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC Create Multiperiod Accounting
- 19. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC
- 20. MPA Scenario 1 – Prorate by Periods Dynamique Solutions LLC
- 21. MULTIPERIOD ACCOUNTING SCENARIO – PRORATE BY DAYS Oracle ERP Cloud | Release 12 and 13 Dynamique Solutions LLC
- 22. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC • Prepayment for Business Liability Insurance • A company prepays annual software maintenance of $12,000 on October 28th , 2017. • The company needs to expense the full amount from October 23 2017 to October 22 2018, with each month being charged according to the days in the month. • Amortization schedule: Month Days in Month Calculation Amount Oct-17 9 (23 to 31) 12000 x (9 / 365) 295.89 Nov-17 30 12000 x (30 / 365) 986.30 Dec-17 31 12000 x (31 / 365) 1,019.18 Jan-18 31 12000 x (31 / 365 1,019.18 Feb-18 28 12000 x (28 / 365) 920.55 Mar-18 31 12000 x (31 / 365) 1,019.18 Apr-18 30 12000 x (30 / 365) 986.30 May-18 31 12000 x (31 / 365) 1,019.18 Jun-18 30 12000 x (30 / 365) 986.30 Jul-18 31 12000 x (31 / 365) 1,019.18 Aug-18 31 12000 x (31 / 365) 1,019.18 Sep-18 30 12000 x (30 / 365) 986.30 Oct-18 22 (1 to 22) 12000 x (22 / 365) 723.29 Total 365 12,000
- 23. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC • Expected journal entries in Oct-17 Period Journal Period Journal Oct-17 Dr Prepaid Expense $12,000 Cr AP Liability $12,000 Oct-17 Dr AP Liability $12,000 Cr Bank $12,000 • Expected journal entries for Deferred Expenses Oct-17 to Sep-18 Period Journal Period Amount Oct-17 Dr Expense $295.89 Cr Prepaid Expenses $314.87 Apr-18 Dr Expense $986.30 Cr Prepaid Expenses $986.30 Nov-17 Dr Expense $986.30 Cr Prepaid Expenses $986.30 May-18 Dr Expense $1,019.18 Cr Prepaid Expenses $1,019.18 Dec-17 Dr Expense $1,019.18 Cr Prepaid Expenses $1,019.18 Jun-18 Dr Expense $986.30 Cr Prepaid Expenses $986.30 Jan-18 Dr Expense $1,019.18 Cr Prepaid Expenses $1,019.18 Jul-18 Dr Expense $1,019.18 Cr Prepaid Expenses $1,019.18 Feb-18 Dr Expense $920.55 Cr Prepaid Expenses $920.55 Aug-18 Dr Expense $1,019.19 Cr Prepaid Expenses $1,019.18 Mar-18 Dr Expense $1,084.55 Cr Prepaid Expenses $1,019.18 Sep-18 Dr Expense $986.30 Cr Prepaid Expenses $986.30 Oct-18 Dr Expense $723.29 Cr Prepaid Expenses $723.29
- 24. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC Proration Formula available for use, not default
- 25. MULTIPERIOD ACCOUNTING SETUPS FOR PRORATION BY DAYS Oracle ERP Cloud | Release 12 and 13 Dynamique Solutions LLC
- 26. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Available Journal Line Rules (JLR) for MPA
- 27. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Journal Line Rule (seeded)
- 28. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Journal Line Rule (custom) – duplicated from seeded rule Update the Proration Formula Activate
- 29. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Journal Line Rule Set (custom) – duplicated from seeded rule set “Invoice Accrual Basis”
- 30. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Replace seeded JLR with custom JLR
- 31. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Activate custom Journal Entry Rule Set
- 32. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Seeded Accounting Method “Standard Accrual”
- 33. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Custom Accounting Method – duplicated from “Standard Accrual”
- 34. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Replace seeded Journal Line Rule Set with custom Rule Set
- 35. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Ready to Activate
- 36. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Accounting Method is Active
- 37. MPA Custom Setups – Proration by Days Dynamique Solutions LLC Specify Ledger Options
- 38. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC Enter Standard Invoice
- 39. Prepayment Scenario 2 – Prorate by Days Dynamique Solutions LLC Enter Expense Distribution Set / Combination
- 40. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC Enter MPA Information
- 41. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC Create Accounting
- 42. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC Create Multiperiod Accounting
- 43. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC
- 44. MPA Scenario 2 – Prorate by Days Dynamique Solutions LLC
- 45. MULTIPERIOD ACCOUNTING IMPLEMENTATION CONSIDERATIONS Oracle ERP Cloud | Release 12 and 13 Dynamique Solutions LLC
- 46. MPA Implementation Considerations • Decide on MPA method (Periods or Days) upfront • Changing the method after implementation will create adjustments to existing amortizations in future periods • Include Create Multiperiod Accounting ESS job as part of Month-end checklist • Additional Journal Rules may be required for Credit Memos, Debit Memos, etc • Consider migrating “in-flight” prepayment amortizations to the new method • Enter MPA invoices with balance un-amortized amount and balance periods/days • Make “dummy” payments to “pay” migrated MPA invoices • Additional setups required (eg Dummy Bank account) to ensure Accounting “wash” for dummy payment • Treat this like a mini-project with requirements, design, setups, testing and implementation Dynamique Solutions LLC
- 48. Multi Period Accounting in Oracle ERP/Fusion Cloud Prithis Das – Dynamique Solutions LLC Cell: +1.630.3649457 Email: [email protected] LinkedIn: www.linkedin.com/in/prithisdas/ Web: www.dynamique.us Dynamique Solutions LLC