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.
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: prithis.das@dynamique.us
• LinkedIn: www.linkedin.com/in/prithisdas/
• Web: www.dynamique.us
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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
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6. Introduction to Multi Period Accounting (MPA)
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• 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
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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 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
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• 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
10. MPA Scenario 1 – Prorate by Periods
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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
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• 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
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Proration Formula used
13. MPA Scenario 1 – Prorate by Periods
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Invoice entry with MPA
Enter the Expense
Distribution Set /
Combination
14. MPA Scenario 1 – Prorate by Periods
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15. MPA Scenario 1 – Prorate by Periods
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Enable the MPA
fields
16. MPA Scenario 1 – Prorate by Periods
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Enable the MPA
information
17. MPA Scenario 1 – Prorate by Periods
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Create Accounting
18. MPA Scenario 1 – Prorate by Periods
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Create Multiperiod Accounting
19. MPA Scenario 1 – Prorate by Periods
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20. MPA Scenario 1 – Prorate by Periods
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22. MPA Scenario 2 – Prorate by Days
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• 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
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• 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
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Proration Formula available for use, not default
26. MPA Custom Setups – Proration by Days
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Available
Journal Line Rules
(JLR) for MPA
27. MPA Custom Setups – Proration by Days
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Journal Line Rule (seeded)
28. MPA Custom Setups – Proration by Days
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Journal Line Rule (custom) – duplicated from seeded rule
Update the Proration
Formula
Activate
29. MPA Custom Setups – Proration by Days
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Journal Line Rule Set
(custom) –
duplicated from seeded
rule set “Invoice Accrual
Basis”
30. MPA Custom Setups – Proration by Days
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Replace seeded
JLR with custom
JLR
31. MPA Custom Setups – Proration by Days
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Activate custom
Journal Entry
Rule Set
32. MPA Custom Setups – Proration by Days
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Seeded Accounting
Method
“Standard Accrual”
33. MPA Custom Setups – Proration by Days
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Custom Accounting
Method –
duplicated from
“Standard Accrual”
34. MPA Custom Setups – Proration by Days
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Replace seeded
Journal Line Rule Set
with custom Rule Set
35. MPA Custom Setups – Proration by Days
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Ready to
Activate
36. MPA Custom Setups – Proration by Days
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Accounting
Method is Active
37. MPA Custom Setups – Proration by Days
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Specify Ledger
Options
38. MPA Scenario 2 – Prorate by Days
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Enter Standard
Invoice
39. Prepayment Scenario 2 – Prorate by Days
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Enter Expense
Distribution Set /
Combination
40. MPA Scenario 2 – Prorate by Days
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Enter MPA
Information
41. MPA Scenario 2 – Prorate by Days
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Create Accounting
42. MPA Scenario 2 – Prorate by Days
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Create Multiperiod Accounting
43. MPA Scenario 2 – Prorate by Days
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44. MPA Scenario 2 – Prorate by Days
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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
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