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AX UG - BOSTON Intercompany and Dual currency Presenters: James Sonne January 17, 2019

Presenter James Sonne, D 365 F&O Enterprise Delivery Manager James is a functional senior

Agenda 1: 00 p. m. – 1: 40 p. m. Intercompany Presentation 1: 40

Objectives • Flavors - Intercompany Transaction Types Ledger journals with mixed companies Intercompany Sales

Definitions The term Intercompany (IC) is used to describe transactions between two separate AX

GJ – Setup - Overview Chart of Accounts Create Receivable Payable Revenue and Consumption

Quick Quiz Which of the following are valid AX intercompany types? a. IC Sales

COA Setup – Plan - 10, 000 feet (GJ EX 1: Cash $5 M,

GJ Goal – Post Balanced IC GJ General ledger > Journals > General journal

Ledger Setup – COA plan Chart of Accounts one set strategy 19* Create Receivable

Ledger Setup – COA setup Chart of Accounts Create new accounts for General Journals

COA – Setup – Assign accounts Posting Profiles General ledger > Setup > Posting

COA – Setup – Assign accounts Posting Profiles General ledger > Setup > Journals

Process – Post an IC GJ General ledger > Journals > General journal 16

Goal Achieved - Balanced IC GJ Vouchers – $5 M Cash General ledger >

Goal Achieved - Balanced IC GJ Vouchers - $10 K per month Prepaids General

IC SO Goal - Trial Balance Example Consolidated Trial Balance before eliminations 19 ©

IC SO PO – Setup - Overview Customer Vendor Point Customer and Vendor to

IC SO PO – Scenario: Drop Ship to End Customer 21 © 2017 RSM

IC SO PO – Assign Revenue and COGS Accounts Inventory management > Setup >

IC SO PO – Customer Vendor Trading Relationship Setup Activate IC: … > General

IC SO PO – Customer Vendor Trading Relationship Setup • Similar screen, different path(s)

IC SO SP – Purchase order Policies • Abc 25 © 2017 RSM US

IC SO PO – Sales order policies 26 © 2017 RSM US LLP. All

IC SO PO – Customer Vendor Setup Effect Customers and Vendors in different companies

IC SO PO Setup – Separate IC AR / AP Agings on Trial Balance

IC SO PO Setup – Assign Items to the IC Vendor Product information management

IC SO PO Setup – Similar setup in D 365 FO 30 © 2017

IC SO PO Setup – End Customer Setup (Optional) Product information management > Released

IC SO PO Example – SO to End Customer Accounts Receivable > Common >

IC SO PO Example – Linked Intercompany Tracing 33 © 2017 RSM US LLP.

IC SO PO – Balanced Trial Balance Goal Achieved 34 © 2017 RSM US

IC SO PO – Vendor Payment • Edit Sales order policies Post Customer journal

Dual Currency - Introduction Functionality that was introduced in Microsoft Dynamics 365 for Finance

Dual Currency – Posting Process • The posting logic has been changed for all

Dual Currency Reports and Inquiries • Various reports and inquiries now show both reporting

Dual Currency – Module Changes • The following modules use the reporting currency as

Dual Currency – Accounts payable and Accounts receivable • The Accounts payable and Accounts

41 © 2017 RSM US LLP. All Rights Reserved.

42 © 2017 RSM US LLP. All Rights Reserved.

RSM US LLP +1 800 274 3978 www. rsmus. com This document contains general

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Presenter James Sonne, D 365 F&O Enterprise Delivery Manager James is a functional senior consultant with extensive experience working on packaged and custom ERP systems in operational, consulting and IT environments. He has over 25 years of controller/vice president of finance experience and worked with a variety of industries throughout his career. He has worked on many Microsoft Dynamics AX implementations over the past ten years both as a sole consultant/manager, and as team senior financial lead. Prior to working with DAX, James has administered custom ERP systems in Windows, AS/400, and Unix/Xenix environments. In addition to mature financial management, his skills include repair of broken implementations, data conversion, software development, software integration, and post-implementation support. He has extensive knowledge of Dynamics AX accounts receivable, accounts payable, general ledger, inventory, trade allowance, and production modules. As well as Dynamics AX implementations, he was involved various levels of Dynamics AX technical trainings. James’s areas of practice have included: acquisitions and dispositions, administration/executive management, bankruptcies and foreclosures, data migrations and database mining, disbursing agent, ERP/financial systems implementation, financial modeling and budgeting, general ledger and financial statements, interim executive management, internal audit, network administration, network design and engineering, process discovery, retirement savings plan trustee, revenue recognition, system training and procedure documentation. Education: BS, Accounting, Mankato State, MN © 2017 RSM US LLP. All Rights Reserved.

Objectives • Flavors - Intercompany Transaction Types Ledger journals with mixed companies Intercompany Sales and Purchase of Inventory • Setup Ledger Chart of Accounts Posting Profiles • Setup Inventory, Customers, Vendors Chart of Accounts Intercompany Customers and Vendors Customer and Vendor Posting Profiles Drop Ship End Customers (incl. cost price check box) • Process Examples General Journal Drop Ship Sales Order to End Customer 5 © 2017 RSM US LLP. All Rights Reserved.

Definitions The term Intercompany (IC) is used to describe transactions between two separate AX / D 365 FO legal entities. The setup and processing goal facilitates advanced accounting requirements by balancing (mathematically synchronizing) the related transactions. There are two forms of IC in AX / D 365 Without Inventory Ledger General Journals (GJ) With Inventory Intercompany Sales / Purchase orders (IC SO PO) (related: IC payments) 6 © 2017 RSM US LLP. All Rights Reserved.

GJ – Setup - Overview Chart of Accounts Create Receivable Payable Revenue and Consumption accounts Journal Names Create Intercompany Journal Posting Profiles Intercompany Posting Accounts 7 © 2017 RSM US LLP. All Rights Reserved.

Quick Quiz Which of the following are valid AX intercompany types? a. IC Sales order / Purchase order b. IC Transfer order c. IC Quarantine order d. All of the above © 2017 RSM US LLP. All Rights Reserved.

COA Setup – Plan - 10, 000 feet (GJ EX 1: Cash $5 M, EX 2: PPD $10 k/mo. ) (EX 3: IC SO PO $xxx) Chart of Accounts – Used by transactional and consolidation LE Create Receivable Payable Revenue and Consumption accounts 10 © 2017 RSM US LLP. All Rights Reserved.

IC SO PO – Setup - Overview Customer Vendor Point Customer and Vendor to each other Posting Profiles Assign Customer and Vendor posting profiles Assign Revenue and Consumption posting profiles Items Assign to the IC Vendor Drop Ship End Customers Set the Cost Price Checkbox 20 © 2017 RSM US LLP. All Rights Reserved.

IC SO PO – Customer Vendor Trading Relationship Setup • Similar screen, different path(s) in D 365 FO > Accounts receivable > Customers > All customers > General (tab) > Intercompany 24 © 2017 RSM US LLP. All Rights Reserved.

IC SO PO Setup – Assign Items to the IC Vendor Product information management > Released products > [select product] > Product (ribbon) > Purchase (fast tab) > Administration > Vendor 29 © 2017 RSM US LLP. All Rights Reserved.

IC SO PO Setup – End Customer Setup (Optional) Product information management > Released products > [select product] > Product (ribbon) > Purchase (fast tab) > Administration > Vendor 31 © 2017 RSM US LLP. All Rights Reserved.

Dual Currency - Introduction Functionality that was introduced in Microsoft Dynamics 365 for Finance and Operations version 8. 1 (October 2018) enables the reporting currency to be repurposed and used as a second accounting currency. This functionality is referred to as dual currency. The changes for dual currency can't be turned off through a configuration key or parameter. Because the reporting currency is used as a second accounting currency, the way that the reporting currency is calculated in the posting logic has changed. 36 © 2017 RSM US LLP. All Rights Reserved.

Dual Currency – Posting Process • The posting logic has been changed for all transactions that generate an accounting entry to general ledger. Here is how the reporting currency was previously calculated: • Transaction currency amount > Accounting currency amount > Reporting currency amount CAD USD EUR • For example, a transaction is entered in the Canadian dollar (CAD) currency. The CAD amount is translated to the accounting currency, which is the US dollar (USD). The USD amount is then translated to the reporting currency, which is the euro (EUR). Therefore, the exchange rates must exist between CAD and USD, and between USD and EUR. • Here is the new calculation: • Transaction currency amount > Accounting currency amount (Accounting currency #1) ⁻ CAD USD • Transaction currency amount > Reporting currency amount (Accounting currency #2) ⁻ CAD EUR • Because of this change, exchange rates must now exist between CAD and USD, and between CAD and EUR. 37 © 2017 RSM US LLP. All Rights Reserved.

Dual Currency Reports and Inquiries • Various reports and inquiries now show both reporting currency amounts and accounting currency amounts. Not every report and inquiry has been updated. For example, reports that show amounts only in the transaction currency haven't changed. • The changes follow one of two patterns: • If the report or inquiry had enough space to show amounts in both the accounting currency and the reporting currency, the reporting currency amounts were added. • If the report or inquiry didn't have enough space to show amounts in both currencies, an option was added so that users can select which currency is shown. • For various reports and inquiries, logic was also added to suppress the reporting currency amounts if the reporting currency is the same as the accounting currency, or if the reporting currency wasn't defined on the ledger for the legal entity. 38 © 2017 RSM US LLP. All Rights Reserved.

Dual Currency – Module Changes • The following modules use the reporting currency as a second accounting currency: • General ledger • Financial reporting • Accounts payable • Accounts receivable • Cash and bank management • Fixed assets 39 © 2017 RSM US LLP. All Rights Reserved.

Dual Currency – Accounts payable and Accounts receivable • The Accounts payable and Accounts receivable modules already tracked reporting currency amounts. However, the amounts weren't shown or used for various processes. The following changes were made: • Reporting currency amounts are now shown on transactions for both customers and vendors. Reporting currency amounts are also shown for the open balance of each transaction. • The aging process has been updated so that an organization can view the aging buckets in either the accounting currency or the reporting currency. • Various inquiries and reports were updated so that they show reporting currency amounts. Examples include the Customer to ledger reconciliation and Vendor to ledger reconciliation reports. • The process foreign currency revaluation already revalued amounts in the reporting currency. However, the reporting currency amount is now calculated through the transaction currency amount, as described in the Posting process section. • Upgrade consideration: Before an upgrade, the reporting currency amounts for documents (invoices, payments, and so on) are calculated through the accounting currency. For example, an invoice is posted before an organization upgrades, and the invoice isn't paid. During the upgrade, the invoice's accounting entry isn't changed. However, after the upgrade, the changes for dual currency are in effect. Therefore, when a payment is made for the invoice, the payment's reporting currency amount is now calculated through the transaction currency amount. When the payment and invoice are settled, a slight difference might be calculated in the realized gain/loss amount, because reporting currency amounts are now calculated differently. If the difference that is calculated is considered significant, the new Reporting currency adjustment journal can be used to adjust the balance of the realized gain/loss and Accounts payable/Accounts receivable ledger accounts in the reporting currency only. 40 © 2017 RSM US LLP. All Rights Reserved.

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