CHAPTER 9: MULTICOMPANY OPERATIONS CONSOLIDATIONS

Transcription

1 Chapter 9: Multicompany Operations - Consolidations CHAPTER 9: MULTICOMPANY OPERATIONS CONSOLIDATIONS Objectives The objectives are: Explain the capabilities of the consolidation feature and provide instructions for restoring the backup required to complete this section. Explain the set up required in the consolidated company and subsidiaries to perform consolidations. Explain the process of exporting data from business units located in other databases. Explain the processes of testing consolidation data from business units. Explain and run the batch jobs used to process consolidations. Explain and demonstrate the process of preparing and posting consolidation elimination entries. Explain and run consolidation reports after the consolidation is complete. Introduction Consolidation means combining the financial statements of two or more separate companies (subsidiaries) into a consolidated financial statement. In Microsoft Dynamics NAV 5.0, each individual company involved in a consolidation is called a business unit. The combined company is called the consolidated company, and is usually a company set up for only this purpose, holding no normal business transactions. In this section, the steps required to perform a consolidation are described, beginning with setting up the consolidated company and subsidiaries. Other consolidation processes, such as exporting and testing data, are described before the consolidation is performed. The final sections explain the need to process consolidation eliminations and provide a review of the consolidation reports available in Microsoft Dynamics NAV

2 Finance in Microsoft Dynamics NAV 5.0 Consolidation Overview and Backup Restoration In Microsoft Dynamics NAV 5.0, consolidations can be performed: Across different charts of accounts. Companies with different fiscal years. Either the full amount or a specified percentage of a particular company s financial information. Companies with different currency. Using different methods of translating individual G/L account. Companies can be consolidated that are: In the same database as the consolidated company. In other Microsoft Dynamics NAV 5.0 databases. In other accounting and business management programs, assuming that the data from the other programs can be exported to a file with the appropriate format. In either a TXT file with fixed length fields or from an XML format. Restore the Consolidation Backup A backup of the consolidation demo database is required to complete this section. The Consolidation.fbk file is available on the training manual download page of PartnerSource. The Consolidation.fbk contains three companies used in this section: CRONUS Consolidated Company CRONUS International CONSOL CRONUS Subsidiary NOTE: To avoid expanding the database because of the restoration, a clean Microsoft Dynamics NAV 5.0 database must be used. To restore the backup, follow these steps: 1. Locate and save the Consolidation.fbk file to a drive accessible to the database. 2. Open the Microsoft Dynamics NAV 5.0 database. 3. On the Tools menu, click Restore. 4. In the Restore window, locate and select the Consolidation.fbk file and click Open. 9-2

3 Chapter 9: Multicompany Operations - Consolidations Set up the Consolidation 5. In the Restore window, click OK. 6. Click OK to the message that the backup was restored. Before performing a consolidation, the consolidated company must be set up. This company is set up the same way that other companies are set up, with its own chart of accounts and, if used, dimensions. The chart of accounts is independent of the chart of accounts in the other business units, and the chart of accounts in the individual business units may differ from one another. In this section, Microsoft Dynamics NAV 5.0 is set up to use consolidations, including: Set up consolidation information on G/L accounts Set up subsidiaries as Business Units Set up dimensions to be included in consolidations NOTE: If a new company is used to consolidate subsidiaries, the Setup Checklist in Microsoft Dynamics NAV 5.0 can be used to copy the Chart of Accounts and other setup information to the new company. Consolidation Information on G/L Accounts The chart of accounts in a subsidiary must specify accounts for consolidation. For each G/L account set up as a Posting account in a subsidiary, the G/L account of the consolidated company must be specified in the consolidation account fields. This mapping allows companies with different chart of accounts to be consolidated. The consolidation information is set up on the Consolidation tab of the G/L Account Card. This tab includes the following fields: 9-3

4 Finance in Microsoft Dynamics NAV 5.0 Field Consol. Debit Acc. Consol. Credit Acc. Consol. Translation Method Description The account in the consolidated company which debit balances on this account are to be transferred to. The account in the consolidated company which credit balances on this account are to be transferred to. Identifies the currency translation rate to be applied to the account. The options are: Average Rate (Manual): The average rate for the period to be consolidated. The average is calculated either as an arithmetic average or as a best estimate and is entered for each business unit. Closing Rate: The rate which prevails in the foreign exchange market at the date for which the balance sheet or income statement is being prepared. The rate is entered for each business unit. Historical Rate: The rate of exchange for the foreign currency which prevailed when the transaction occurred. Composite Rate: The current period amounts are translated at the average rate and added to the previously recorded balance in the consolidated company. This method is typically used for retained earnings accounts because they include amounts from different periods and are thus a composite of amounts translated with different exchange rates. Equity Rate: Similar to Composite. The posting of the differences are to separate G/L Accounts. If the balance must be transferred daily, specify account numbers for both the Consol. Debit Acc. and Consol. Credit Acc. fields because: Although amounts equal to zero are not transferred, an account whose final balance is zero might have had a non-zero balance on some dates. There can be a debit or credit balance for some dates even though the final balance for the consolidation period is expected to be a credit or debit balance. If it is not required to differentiate between debit and credit balances for a particular account, use the same account number in both the Consol. Debit Acc. and Consol. Credit Acc. fields. 9-4

5 Chapter 9: Multicompany Operations - Consolidations Set up Consolidation Information on G/L Accounts To enter consolidation information on G/L accounts in a subsidiary company, follow these steps: 1. On the File menu, click Company > Open. 2. Click CRONUS Subsidiary and then click OK. 3. Click OK to the message regarding the demonstration company. 4. On the Navigation Pane, click Financial Management > General Ledger > Chart of Accounts. 5. Locate and select a G/L account set with an Account Type of Posting. 6. Click Account > Card. 7. Click the Consolidation tab. 8. In the Consol. Debit Acc. field, enter the relevant G/L account. 9. In the Consol. Credit Acc. field, enter the relevant G/L account. 10. In the Consol. Translation Method field, click the AssistButton and select the relevant option for this account. 11. Repeat steps 8-10 for all Posting type accounts in this subsidiary. 12. Repeat steps 1-11 for each company subsidiary. NOTE: Unless the consolidated company is a subsidiary of another company, it is not necessary to set up the consolidation debit and credit accounts in the consolidated company. Business Unit Card Overview To consolidate several companies financial data in a consolidated company, the subsidiaries must be set up as business units in the consolidated company. The business unit information is set up in the Business Unit Card window, accessed from the Navigation Pane by clicking Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 9-5

6 Finance in Microsoft Dynamics NAV 5.0 FIGURE 9.1 BUSINESS UNIT CARD WINDOW Consolidation processes are run from functions on the Business Unit Card window, including: Specifying exchange rates Testing business units Importing business units Running consolidation reports In this section, the fields on the Business Unit Card window are explained and the functions on the menu buttons are described. The General tab of the Business Unit Card includes the following fields: Field Code Name Company Name Description A unique code to identify the business unit. When the consolidation function imports information from the business units, this code is used to locate the relevant company. A short description of the business unit. Identifies the subsidiary to be linked with this business unit. To be used in consolidations, this name must match a company in Microsoft Dynamics NAV 5.0. Click the AssistButton to access a list of available companies. 9-6

7 Chapter 9: Multicompany Operations - Consolidations Field Currency Code Currency Exchange Rate Consolidate Consolidation % Starting Date and Ending Date Data Source Description Identifies the business unit s local currency (LCY). This code specifies how the consolidation feature reads the consolidation file. If a code is not specified, the amounts in the consolidation file are regarded as being LCY amounts. If a code is specified, the consolidated amounts are regarded as being denominated in that currency. If the foreign subsidiary is providing the translated financial statement, the Currency Code must be blank. The consolidation process regards the consolidated amounts as being denominated in LCY, and does not perform a translation. Indicates which currency exchange rate table Microsoft Dynamics NAV 5.0 uses while importing consolidation data. The options are: Local: The currency exchange rate table in the current company is used. Business Unit: The currency exchange rate table in the business unit s company is used. Determines whether the business unit is included in the consolidation. If selected, the company is included in the consolidation. Indicates the percentage of each account in this business unit to be included in the consolidation. If this field is empty, Microsoft Dynamics NAV 5.0 imports 100% of each account from the business unit. Determines the period for which data is imported. Enter the starting date and ending date for the business unit's fiscal year if the business unit's fiscal year is different from the consolidated company's fiscal year. Indicates whether the data is retrieved from the business unit in the business unit's local currency (LCY) or in its additional reporting currency (ACY). 9-7

8 Finance in Microsoft Dynamics NAV 5.0 Field File Format Description Indicates in which file format the business unit submits data if the business unit is in a separate database. If the business unit has version 3.70 or earlier of Microsoft Dynamics NAV, they will submit a.txt file. If they have version 4.00 or later, they will submit an.xml file. The G/L Accounts tab contains the following fields: Field Exch. Rate Gains Acc. and Exchange Rate Losses Acc. Comp. Exch. Rate Gains Acc. and Comp. Exchange Rate Losses Acc. Equity Exch. Rate Gains Acc. and Equity Exch. Rate Losses Acc. Description Identifies the G/L accounts Microsoft Dynamics NAV 5.0 uses to post any exchange rate gains or losses. Identifies the G/L accounts Microsoft Dynamics NAV 5.0 uses to post any exchange rate gains or losses that result from consolidation of accounts with a setting of Composite in the Consol. Translation Method field. If not specified, the accounts specified in the Exch. Rate Gains Acc. and Exch. Rate Loss Acc. fields are used. Identifies the G/L accounts Microsoft Dynamics NAV 5.0 uses to post any exchange rate gains or losses that result from consolidation of accounts with a setting of Equity in the Consol. Translation Method field. If not specified, the accounts specified in the Exch. Rate Gains Acc. and Exch. Rate Loss Acc. fields are used. Residual Account Identifies the G/L accounts Microsoft Dynamics NAV 5.0 uses to post residual amounts, which may occur because of importing data during a consolidation. For example, because of balance sheet beginning balance restatements. Minority Exch. Rate Gains Acc. and Minority Exch. Rate Losses Acc. Identifies the G/L accounts Microsoft Dynamics NAV 5.0 uses to post exchange rate gains or losses that result from consolidation of accounts from a business unit with minority shares. These fields are used if the Consolidation % for the business unit is less than 100. If not specified, the accounts specified in the Exch. Rate Gains Acc. and Exch. Rate Loss Acc. fields are used. NOTE: The G/L account fields used during consolidation depend on the Consol. Translation Method specified on each G/L account card. If a Consol. Translation Method is not specified when new G/L accounts are created, Average is used. The Bus. Unit button contains the List menu option that accesses a list of the existing business units. 9-8

9 Chapter 9: Multicompany Operations - Consolidations The Exch. Rates button accesses the three exchange rates used when consolidating the financial statements of business units if the financial statements are in a foreign currency. Exchange rates are explained in the Multicurrency section of the Finance content. The Functions button contains the processes for testing and importing the business units. Business unit data is tested prior to importing the data into the consolidated company. The menu options are: Menu Option Test Database Test File Import Database Import File Description If the business units are existing companies in the current Microsoft Dynamics NAV 5.0 database, this option is used to test the data in those business units. If the business units are maintained in other databases, this option is used to test the data in a file exported from those databases. Imports the consolidation data from the companies in the current Microsoft Dynamics NAV 5.0. Imports the consolidation data from the export file from the other database. These functions are processed in the Test Data for Consolidation section. The Reports button contains the following consolidation reports: Menu Option Eliminations Trial Balance Trial Balance (4) Description Tentative trial balance report used prior to posting eliminations. Trial balance report including posted consolidation entries used by companies consolidating more than four business units. Trial balance report including posted consolidation entries used by companies consolidating four or less business units. 9-9

10 Finance in Microsoft Dynamics NAV 5.0 These reports are explained in further detail in the Process Consolidation Eliminations and Print Consolidation Reports sections. Set up Business Units To set up business units in the consolidated company, follow these steps: 1. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 2. Press F3. 3. In the Code field, enter a unique identifier. 4. In the Name field, enter a short description of the business unit. 5. In the Company Name field, click the AssistButton and select the corresponding company. 6. In the Currency Code field, click the AssistButton and select the relevant currency for this business unit. 7. In the Currency Exchange Rate field, click the AssistButton and select the relevant exchange rate table. 8. Click to insert a check mark in the Consolidate check box to include this business unit in the consolidation process. 9. In the Consolidation % field, enter the percentage of this business unit to be included in the consolidation process. 10. If the fiscal year for this business unit is different from that of the consolidated company, enter the business unit s fiscal year in the Starting Date and Ending Date fields 11. In the Data Source field, click the AssistButton and select the LCY or ACY. 12. In the File Format field, click the AssistButton and select the relevant file format for this business unit. To fill in the G/L Accounts tab, follow these steps: 1. Click the G/L Accounts tab. 2. In the Exch. Rate Gains Acct. field, click the AssistButton and select the relevant account. 3. In the Exch. Rate Losses Acct. field, click the AssistButton and select the relevant account. 4. In the Comp. Exch. Rate Gains Acct. field, click the AssistButton and select the relevant account. 5. In the Comp. Exch. Rate Losses Acct. field, click the AssistButton and select the relevant account. 6. In the Equity Exch. Rate Gains Acct. field, click the AssistButton and select the relevant account. 7. In the Equity Exch. Rate Losses Acct. field, click the AssistButton and select the relevant account. 9-10

11 Chapter 9: Multicompany Operations - Consolidations 8. In the Residual Account field, click the AssistButton and select the relevant account. 9. If the business unit is less than 100%: a. In the Minority Exch. Rate Gains Acct. field, click the AssistButton and select the relevant account. b. In the Minority Exch. Rate Losses Acct. field, click the AssistButton and select the relevant account. Include Dimensions in Consolidations Dimensions used by subsidiaries can be included in consolidations. However, there are many setup conditions. If consolidations of subsidiaries are not done using dimensions: Dimension set-up is not required in the consolidated company. Dimensions must not be selected in any consolidation function or report. If consolidations of subsidiaries are completed with dimensions where the subsidiary uses: The same dimensions as the consolidated company, then the dimensions must be set up in the consolidated company. Different dimensions than the consolidated company: Dimensions must be set up in the consolidated company. Dimensions in the subsidiary company must be mapped to the dimensions in the consolidated company. In Microsoft Dynamics NAV 5.0, different dimensions are mapped in the subsidiary company using the Consolidation Code on the Dimensions or Dimensions Values window. For example, a Nordic business unit has separate dimension values for Denmark, Sweden, and Norway. The consolidated company only requires information for the consolidated Nordic region. To consolidate the dimension values for Denmark, Sweden, and Norway in this business unit into the Nordic dimension value in the consolidated company, the Dimension Value window is completed as follows: 9-11

12 Finance in Microsoft Dynamics NAV 5.0 In the consolidated company: Code Name Consolidation Code NORDIC Sales Territory, Nordic In the subsidiary company: Code Name Consolidation Code DENMARK Sales Territory, Denmark NORDIC NORWAY Sales Territory, Norway NORDIC SWEDEN Sales Territory, Sweden NORDIC Set up Dimensions with Consolidation Codes To set up consolidations on dimensions, follow these steps: 1. On the File menu, click Database > Open. 2. Select the subsidiary company with dimensions, and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Setup > Dimensions > Dimensions. 4. On the View menu, click Show Column. 5. Select the Consolidation Code field and click OK. 6. For each dimension that must map to a different dimension, in the Consolidation Code field, enter the corresponding Dimension Code used in the consolidated company. To set up consolidations on dimension values, follow these steps: 1. In the Dimensions window, click the dimension to set up dimension values with consolidation information. 2. Click Dimension > Values. 3. On the View menu, click Show Column. 4. Select the Consolidation Code field and click OK. 5. For each dimension value that must map to a different dimension value, in the Consolidation Code field, enter the corresponding Dimension Value Code used in the consolidated company. NOTE: For more information about dimensions, refer to the Dimensions section of the Application Setup content. 9-12

13 Chapter 9: Multicompany Operations - Consolidations Short Answer Question: G/L Account Setup for Consolidations What is the purpose of setting up consolidation information on G/L accounts in the subsidiary companies? Short Answer Question: Dimensions and Consolidations When dimensions are used in consolidations, and the dimensions are different in the subsidiary and consolidated companies, what setup must occur? 9-13

14 Finance in Microsoft Dynamics NAV 5.0 Lab 9.1: Set up Business Units Scenario CRONUS International Corporation owns 100% interest in CRONUS International CONSOL and just acquired 50% in another company as a subsidiary, called CRONUS Subsidiary. January 2007 will be reported with consolidated financial statements. Phyllis, the accounting manager, set up the chart of accounts in both companies and asked you to help with setup by entering the following business units: CRONUS Subsidiary Code: SUB 50% owned by CRONUS Consolidated Company Same fiscal year as the parent company CRONUS International CONSOL Code: INTC 100% owned by CRONUS Consolidated Company Same fiscal year as the parent company Both subsidiaries: Have the same fiscal year and currency as the parent company. Are within the same database using Microsoft Dynamics NAV 5.0. Use account 3120 as the residual account. HINT: Since the same currency is used, exchange rate accounts are not required. Challenge Yourself! 1. Create the business unit for CRONUS Subsidiary as specified in the scenario. 2. Create the business unit for CRONUS International CONSOL as specified in the scenario. 9-14

15 Chapter 9: Multicompany Operations - Consolidations Lab 9.1: Set up Business Units Scenario CRONUS International Corporation owns 100% interest in CRONUS International CONSOL and just acquired 50% in another company as a subsidiary, called CRONUS Subsidiary. January 2007 will be reported with consolidated financial statements. Phyllis, the accounting manager, set up the chart of accounts in both companies and asked you to help with setup by entering the following business units: CRONUS Subsidiary Code: SUB 50% owned by CRONUS Consolidated Company Same fiscal year as the parent company CRONUS International CONSOL Code: INTC 100% owned by CRONUS Consolidated Company Same fiscal year as the parent company Both subsidiaries: Have the same fiscal year and currency as the parent company. Are within the same database using Microsoft Dynamics NAV 5.0. Use account 3120 as the residual account. HINT: Since the same currency is used, exchange rate accounts are not required. Need a Little Help? 1. Open the consolidated company. 2. Open the Business Unit Card window. 3. Create the business unit for CRONUS Subsidiary as specified in the scenario. 4. Press F3. 5. Create the business unit for CRONUS International CONSOL as specified in the scenario. 9-15

16 Finance in Microsoft Dynamics NAV 5.0 Export Data for Consolidation If a business unit is located in another database, the consolidation data must be exported to a file before it can be consolidated. Each company must be exported separately. Microsoft Dynamics NAV 5.0 uses the Export Consolidations batch job for this purpose. In this section, the process of exporting consolidation data is explained. Export Consolidation Batch Job Overview The Export Consolidation batch job processes all the entries in every G/L account in the following order: 1. For every combination of selected dimensions and date, the contents of the entries Amount fields are totaled and exported. 2. The next combination of selected dimensions and date with the same account number is processed. 3. The combinations in the next account number are processed, and so on. The exported entries contain the following fields: Account No., Posting Date, and Amount. If dimensions information was also exported, dimension codes and dimension values are also included. For each exported line: If the total of the Amount fields is a debit, the account number that is set up in the business unit s Consol. Debit Acc. field is exported to the line. If the total is a credit, the corresponding number in the Consol. Credit Acc. field is exported to the line. The date used is either the period s ending date or, if the transfer takes place per day, the date of the calculation. Including dimensions, the value is the specified dimension or the value in the Consolidation Code field if the dimension is mapped to a Consolidation Code. The Export Consolidation batch job is accessed on the Navigation Pane by clicking Financial Management > General Ledger > Periodic Activities > Consolidation > Export Consolidation, and includes the following fields: 9-16

17 Chapter 9: Multicompany Operations - Consolidations Field File Format File Name Starting Date and Ending Date Copy Dimensions Parent Currency Code Description Indicates the file format the business unit uses to submit its data. If the business unit has version 3.70 or earlier of Microsoft Dynamics NAV, it will submit a.txt file. If the business unit has version 4.00 or later, it will submit an.xml file. The only reason to select the old format is if the parent company has not yet upgraded to Microsoft Dynamics NAV 4.0 or later. Identifies the name and location of the file (on diskette or hard disk) where the data is exported. Identifies the first and last dates in the period from which entries will be exported. The period defined in these fields cannot exceed 500 days. If a closing date is used, the Starting Date and Ending Date must be the same. Determines how dimension entries are to be classified when exporting to a consolidated company. Identifies the currency code of the company that will perform the consolidation. Run the Export Consolidation Batch Job To run the Export Consolidation batch job, follow these steps: 1. On the File menu, click Database > Open. 2. Select the database that contains the subsidiary company to be exported, and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Export Consolidation. 4. In the File Format field, click the AssistButton and select the relevant file format. 5. In the File Name field, click the AssistButton. 6. In the Export to XML (or Text) File window, select the location of the export file and in the File Name field, enter a name for the file. 7. Click Save. 8. In the Starting Date field, enter the beginning date of the export. 9. In the Ending Date field, enter the ending date of the export. 10. If dimensions are to be exported, in the Copy Dimension field, click the AssistButton. 11. For each dimension to copy, click to insert a check mark in the Selected check box. 9-17

18 Finance in Microsoft Dynamics NAV Click OK to close the Dimension Selection window. 13. In the Parent Currency Code field, click the AssistButton and select the parent company's currency. 14. Click OK to run the batch job. 9-18

19 Chapter 9: Multicompany Operations - Consolidations Lab 9.2: Create a Consolidation Export File Scenario CRONUS Subsidiary is only 50% owned by the CRONUS Consolidated Company, and the other 50% is owned by a separate company. Phyllis, the accounting manager, is working at the CRONUS Subsidiary company location with their finance team and needs an export file to send to the parent company for their January 2007 consolidation. Create an.xml export file based on the following criteria: Name the file CRONUS Subsidiary_Jan07 and save to your desktop. The other parent company uses the same currency but does not use dimensions. Challenge Yourself! Run the Export Consolidation batch job as specified in the scenario. 9-19

20 Finance in Microsoft Dynamics NAV 5.0 Lab 9.2: Create a Consolidation Export File Scenario CRONUS Subsidiary is only 50% owned by the CRONUS Consolidated Company, and the other 50% is owned by a separate company. Phyllis, the accounting manager, is working at the CRONUS Subsidiary company location with their finance team and needs an export file to send to the parent company for their January 2007 consolidation. Create an.xml export file based on the following criteria: Name the file CRONUS Subsidiary_Jan07 and save to your desktop. The other parent company uses the same currency but does not use dimensions. Need a Little Help? 1. Open the CRONUS Subsidiary company. 2. Open the Export Consolidation batch job. 3. Set the name and location of the export file as specified in the scenario. 4. Set the period for January Run the batch job. 9-20

21 Chapter 9: Multicompany Operations - Consolidations Test Data for Consolidation Before consolidating data, it is helpful to verify whether there are differences between the basic information in the business units and in the consolidated company. Data in business units can be tested: From exported files using the Consolidation - Test File report Within the database using the Consolidation - Test Database report Both batch jobs perform the same function and produce the same results. In this section, both reports are explained and reviewed. Testing Data Both the Consolidation - Test File and Consolidation - Test Database reports review the business units financial data. The reports then display the G/L accounts and the dimensions that are included in the consolidation period. The report displays error messages when accounts and dimensions are not set up correctly, including when: Either the consolidated debit or credit account specified on the G/L account in the subsidiary company is not set up as a G/L account in the consolidated company. The consolidation code for a dimension set up in the subsidiary is not a dimension in the consolidated company. The dimension in the subsidiary is not set up as a dimension in the consolidated company. In addition, blank values appear on the report when either the consolidated debit or credit account is not entered on the G/L account in the subsidiary company. All errors must be corrected before the business unit is imported for consolidation. 9-21

22 Finance in Microsoft Dynamics NAV 5.0 Correcting Data To correct accounts, ensure that the consolidation accounts in the subsidiary company are mapped to accounts that exist in the consolidated company. To correct dimensions, ensure that: In the subsidiaries, the correct consolidation codes are mapped to the appropriate dimensions in the consolidated company. The same dimensions and dimension values are set up in both the consolidated company and subsidiaries if the same dimensions are used. Run the Consolidation Test File Report To run the Consolidation - Test File report, follow these steps: 1. On the File menu, click Company > Open. 2. Select the consolidated company and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 4. Locate and select the business unit with an export file to test. 5. Click Functions > Test File. 6. In the File Format field, click the AssistButton and select the format of the file to be imported. 7. In the File Name field, click the AssistButton. 8. In the Import from XML (or Text) File window, locate the exported file. 9. Click Open. 10. Click Preview to review the report on the screen, or click Print to print the report. Run the Consolidation Test Database Report To run the Consolidation - Test Database report, follow these steps: 1. On the File menu, click Company > Open. 2. Select the consolidated company and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 4. Locate and select the business unit to test. 5. Click Functions > Test Database. 6. In the Filter field on the Code line, click the AssistButton and select the relevant business unit to test. It is recommended to test each business unit individually. 9-22

23 Chapter 9: Multicompany Operations - Consolidations 7. Click OK. 8. Click the Options tab. 9. In the Starting Date field, enter the beginning date of the test. 10. In the Ending Date field, enter the ending date of the test. 11. To test that dimensions are properly mapped, in the Copy Dimension field, click the AssistButton. 12. For each dimension to test, click to insert a check mark in the Selected check box. 13. Click OK to close the Dimension Selection window. 14. Click Preview to review the report on the screen, or click Print to print the report. 9-23

24 Finance in Microsoft Dynamics NAV 5.0 Lab 9.3: Test the Consolidation Data Scenario In Lab 9.1 you set up the business units for the subsidiary companies. You now need to test each business unit to verify the set up. Test each business unit separately for January 2007, and preview each report on the screen. Since dimensions and currency are the same in all companies, it is not necessary to specify either in this test. The test report for CRONUS International CONSOL shows that there is an account missing consolidation information and that there are two accounts not set up in the CRONUS Consolidated Company. Make note of this information; it is corrected in Lab 9.4. Challenge Yourself! 1. Run the Consolidation - Test Database batch job for the INTC company in the January 2007 period. 2. Preview the report and make note of any accounts missing data or with an error message. 3. Run the Consolidation - Test Database batch job for the SUB company in the January 2007 period. 4. Preview the report and make note of any accounts missing data or with an error message. 9-24

25 Chapter 9: Multicompany Operations - Consolidations Lab 9.3: Test the Consolidation Data Scenario In Lab 9.1 you set up the business units for the subsidiary companies. You now need to test each business unit to verify the set up. Test each business unit separately for January 2007, and preview each report on the screen. Since dimensions and currency are the same in all companies, it is not necessary to specify either in this test. The test report for CRONUS International CONSOL shows that there is an account missing consolidation information and that there are two accounts not set up in the CRONUS Consolidated Company. Make note of this information; it is corrected in Lab 9.4. Need a Little Help? 1. Open the CRONUS Consolidated Company. 2. Open the Business Unit Card window for the CRONUS International CONSOL company. 3. Open the Consolidation - Test Database batch job. 4. Filter on the INTC code and the January 2007 period. 5. Preview the report and make note of any accounts missing data or with an error message. 6. Run the Consolidation - Test Database batch job for the SUB company in the January 2007 period. 7. Preview the report and make note of any accounts missing data or with an error message. 9-25

26 Finance in Microsoft Dynamics NAV 5.0 Lab 9.4: Correct the Consolidation Data Scenario In Lab 9.3 you tested the data for both subsidiary companies and found the following errors in the CRONUS International CONSOL company: Account 1240 is missing consolidation accounts. WIP/Job Sales accounts 2211 and 2212 do not exist in the consolidated company. You contact Phyllis about the errors and are instructed to: Assign consolidation debit and credit accounts 1240 to account Verify that the consolidation method is set to Closing Rate. Assign WIP/Job sales accounts to the WIP Sales account used in the consolidated company. Verify that the consolidation method is set to Closing Rate. After correcting these accounts, test the CRONUS International CONSOL business unit for January 2007 again. HINT: Locate the WIP Sales account number in the CRONUS Consolidated Company using the Find function on the Toolbar. Challenge Yourself! 1. Find the WIP Sales account number in the CRONUS Consolidated Company and make note of the number. 2. Update the accounts in the CRONUS International CONSOL company as specified in the scenario. 3. Run the Consolidation - Test Database batch job for the INTC company in the January 2007 period to verify there are no errors. 9-26

27 Chapter 9: Multicompany Operations - Consolidations Lab 9.4: Correct the Consolidation Data Scenario In Lab 9.3 you tested the data for both subsidiary companies and found the following errors in the CRONUS International CONSOL company: Account 1240 is missing consolidation accounts. WIP/Job Sales accounts 2211 and 2212 do not exist in the consolidated company. You contact Phyllis about the errors and are instructed to: Assign consolidation debit and credit accounts 1240 to account Verify that the consolidation method is set to Closing Rate. Assign WIP/Job sales accounts to the WIP Sales account used in the consolidated company. Verify that the consolidation method is set to Closing Rate. After correcting these accounts, test the CRONUS International CONSOL business unit for January 2007 again. HINT: Locate the WIP Sales account number in the CRONUS Consolidated Company using the Find function on the Toolbar. Need a Little Help? 1. Open the CRONUS Consolidated Company. 2. Open the Chart of Accounts window. 3. Use the Find icon on the Toolbar to find the WIP Sales account number and make note of the number. 4. Open the CRONUS International CONSOL company. 5. Open the Chart of Accounts window. 6. Locate and open the G/L Account Card for account Enter the consolidation information as stated in the scenario. 8. Locate and open the G/L Account Card for account Enter the consolidation information as stated in the scenario. 10. Press PAGE DOWN to go to account Enter the consolidation information as stated in the scenario. 12. Open the CRONUS Consolidated Company. 13. Open the Consolidation - Test Database batch job. 14. Filter on the INTC code and the January 2007 period. 15. Run the batch job and verify there are no errors. 9-27

28 Finance in Microsoft Dynamics NAV 5.0 Process the Consolidation Once all errors from the test reports are corrected, data can be consolidated from: Exported files using the Import Consolidation from File batch job Within the database using the Import Consolidation from DB batch job Both batch jobs perform the same function and produce the same results. In this section, the batch jobs are explained and the run. Consolidating Data Both the Import Consolidation from DB and Import Consolidation from File batch jobs process all the entries in the business unit included in the consolidation. When the batch job begins, a status message indicates which business unit, as well as which account number and date, is being processed. The batch job process update the G/L Entry table directly, there are no journal batches created to post in the consolidated company. Posted entries can be viewed on the Financial Management menu by clicking General Ledger > History > Registers. When the consolidation process is finished: Transactions for each account in the subsidiary are totaled. The net amounts transferred to the consolidated company using the accounts specified on the subsidiary's G/L account in the Consol. Debit Acc. or Consol. Credit Acc. fields. Residual amounts are posted due to rounding differences that occur from the calculation of 50% of the business unit entry. /LI> If there are existing entries for the business unit in the consolidated company, they are overwritten and the following text is assigned: Changed by consolidation on (work date). NOTE: Consolidating using multicurrency is explained in the Multicurrency section of the Finance content. 9-28

29 Chapter 9: Multicompany Operations - Consolidations Run the Import Consolidation from DB Batch Job To fill in the Import Consolidation from DB batch job, follow these steps: 1. On the File menu, click Company > Open. 2. Select the consolidated company and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 4. Locate and select the business unit to import. 5. Click Functions > Import Database. 6. In the Filter field on the Code line, click the AssistButton and select the relevant business unit to import. It is recommended to import each business unit individually. 7. Click OK. 8. Click the Options tab. 9. In the Starting Date field, enter the first date in the period from which entries are imported 10. In the Ending Date field, enter the last date in the period from which entries are imported 11. If dimension detail is to be included in the consolidation, in the Copy Dimension field, click the AssistButton. 12. For each dimension to include, click to insert a check mark in the Selected check box. 13. Click OK to close the Dimension Selection window. 14. In the Document No. field, enter a number that appears on all the entries that are imported. 15. Change the value in the Parent Currency Code field only if currency codes in the business unit are different than the parent company's. To run the batch job, follow these steps: 1. Click OK. 2. Click Yes to consolidate in the specified period. 3. If the consolidation period is not within the latest fiscal year in the consolidated company, messages appear asking to continue. Click Yes to each message. 9-29

30 Finance in Microsoft Dynamics NAV 5.0 To review the posted entries, follow these steps: 1. In the General Ledger folder, click History > Registers. 2. Locate and select the consolidation register. 3. Click Register > General Ledger. 4. Review the entries and then close the General Ledger Entries and G/L Registers windows. Run the Import Consolidation from File Batch Job To run the Import Consolidation from File batch job, follow these steps: 1. On the File menu, click Company > Open. 2. Select the consolidated company and click OK. 3. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Consolidation > Business Units. 4. Locate and select the business unit to import. 5. Click Functions > Import File. 6. In the File Format field, click the AssistButton and select the format of the file to be imported. 7. In the File Name field, click the AssistButton. 8. In the Import from XML (or Text) File window, locate the exported file. 9. Click Open. 10. In the Document No. field, enter a number that appears on all the entries that are imported. 11. Click OK. 12. Click Yes to consolidate in the specified period. 13. If the consolidation period is not within the latest fiscal year in the consolidated company, a message appears asking to continue. Click Yes. To review the posted entries, follow these steps: 1. In the General Ledger folder, click History > Registers. 2. Locate and select the consolidation register. 3. Click Register > General Ledger. 4. Review the entries and then close the General Ledger Entries and G/L Registers windows. 9-30

31 Chapter 9: Multicompany Operations - Consolidations Lab 9.5: Consolidate the Subsidiaries Scenario January 2007 processing is complete and consolidated financial statements are ready to be run. Phyllis, the accounting manager, has given you the responsibility of managing consolidations because of your involvement with the set up. Consolidate the business units using the following criteria: Import each business unit individually. Use a document number that represents the business unit and the period (Jan07) for each consolidation. Accept any messages when running the batch jobs. After the consolidation is complete, review the registers. Challenge Yourself! 1. Run the Import Consolidation from DB batch job for the INTC company as specified in the scenario. 2. Run the Import Consolidation from DB batch job for the SUB company as specified in the scenario. 3. Review the General Ledger entries for both consolidation registers. 9-31

32 Finance in Microsoft Dynamics NAV 5.0 Lab 9.5: Consolidate the Subsidiaries Scenario January 2007 processing is complete and consolidated financial statements are ready to be run. Phyllis, the accounting manager, has given you the responsibility of managing consolidations because of your involvement with the set up. Consolidate the business units using the following criteria: Import each business unit individually. Use a document number that represents the business unit and the period (Jan07) for each consolidation. Accept any messages when running the batch jobs. After the consolidation is complete, review the registers. Need a Little Help? 1. Open the CRONUS Consolidated Company. 2. Open the Business Unit Card for the CRONUS International CONSOL business unit. 3. Open the Import Consolidation from DB batch job. 4. Filter on the INTC code and the January 2007 period. 5. Enter the document number as specified in the scenario. 6. Run the batch job, accepting any messages. 7. Press PAGE DOWN to go to the CRONUS Subsidiary business unit. 8. Filter on the SUB code and the January 2007 period. 9. Enter the document number as specified in the scenario. 10. Run the batch job, accepting any messages. 11. Open the G/L Registers window. 12. Review the General Ledger entries for both consolidation registers. 9-32

33 Chapter 9: Multicompany Operations - Consolidations Process Consolidation Eliminations When all the financial data from the business units is imported to the consolidated company, the entries involving intercompany transactions must be eliminated. Processing consolidation eliminations consists of the following steps: 1. Calculate the eliminations. 2. Enter the elimination amounts in a general journal. 3. Run the G/L Consolidation Eliminations report to review the pending elimination entries. 4. Post the general journal. 5. Run the G/L Consolidation Eliminations report to review the posted results. Calculating the eliminations is a time consuming, manual process that may be aided by setting up specific intercompany accounts, intercompany customers/vendors, and intercompany posting groups. This section explains the general journal setup and G/L Consolidation Eliminations report, and then provides a demonstration of processing consolidation eliminations. General Journal Setup The consolidation elimination entries are entered in the consolidated company using a journal batch that does not contain a check mark in the Copy VAT Setup to Jnl. Lines check box. It is important to use a journal batch with this set up because if an elimination entry is posted in a journal with the Copy VAT Setup to Jnl. Lines check box checked, a VAT entry is automatically posted. This is not correct since VAT is still chargeable on the transaction, even though it was an intercompany transaction. G/L Consolidation Eliminations Report Overview The G/L Consolidation Eliminations report provides a tentative trial balance that shows the consequences of eliminating entries by comparing the entries in the consolidated company with the pending eliminations in the general journal. The G/L Consolidation Eliminations report is accessed from the Business Unit Card by clicking Reports > Eliminations. On the G/L Account tab, filters can be set on specific accounts and Global dimensions. 9-33

34 Finance in Microsoft Dynamics NAV 5.0 The Options tab contains the following fields: Field Starting Date Ending Date Business Unit Code Description Indicates the first date in the period from which posted entries in the consolidated company will be shown. Indicates the last date in the period from which posted entries in the consolidated company will be shown. Identifies the business units to be included in the report. Journal Template Name Journal Batch Show Identifies the journal template that will be used for the unposted eliminations. Identifies the journal batch that contains the unposted eliminations. Determines whether the amounts are shown as a Net Change or as a Balance as of the current date. When the report is run, each account appears following the structure of the chart of accounts. An account is not shown if the amount is zero for the reporting period. The following information is displayed for each account: Account No. and Name If Business Unit Codes were entered on the Options tab: The first amount column displays totals for the consolidated company, excluding the selected business units and eliminations. The second amount column displays totals of the selected business units imported entries. If Business Unit Codes were not entered on the Options tab: The first amount column displays totals for the consolidated company excluding eliminations. The second amount column displays totals for the posted eliminations in the consolidated company. The third amount column displays totals for the consolidated company with all the business units and posted eliminations. The Eliminations column displays the elimination entries pending in the general journal. A running total of the pending eliminations is shown at the bottom of each page of the report. The Description column displays the text entered in the Description field on the pending eliminations general journal. 9-34

35 Chapter 9: Multicompany Operations - Consolidations The Total Incl. Eliminations column displays the consolidated company s projected total after the pending eliminations are posted. If the projected consolidated total for each account is reasonable, the pending eliminations in the general journal can be posted. Thus, the G/L Consolidation Eliminations report is similar to a journal test report. Demonstration: Process and Review Elimination Entries Scenario: After running the consolidation process, Phyllis reviewed consolidation entries and found the following intercompany transaction that must be eliminated: On January 15, 2007, CRONUS International CONSOL sold items to CRONUS Subsidiary in the amount of Since CRONUS Subsidiary is only owned 50% by CRONUS International Corporation, only 50% of the amount must be eliminated. Phyllis sets up a general journal batch for consolidations and then enters the following elimination entries: Posting Date G/L Account Description Amount 01/31/ Eliminate Interco Sales /31/ Eliminate Interco Sales /31/ Eliminate Interco Sales /31/ Eliminate Interco Sales Before the elimination entries are posted, the G/L Consolidation Eliminations report is run to review the results of posting these entries. NOTE: Labs 9.1, 9.4, and 9.5 must be completed to perform this demonstration. Steps To set up the general journal, follow these steps: 1. On the File menu, click Company > Open. 2. Select the CRONUS Consolidated Company and click OK. 3. On the Navigation Pane, click Financial Management > Setup > General > Journal Templates. 4. With the General journal line selected, click OK. 5. Click Template > Batches. 6. Press F3 to insert a new batch. 9-35