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Transfer Pricing and Reporting Ledgers in Dynamics GP

Transfer Pricing and Reporting Ledgers in Dynamics GP

In addition to Elimination and Adjusting Entries, Reporting Ledgers can be used to record tax adjustments, non-operating adjustments, or Transfer Pricing entries. Often these types of entries are kept separate from Management Financial Reports and Operational Financial Statements. Transfer Pricing entries can be posted to the General Ledger and then Eliminated or posted to a separate Reporting Ledger and simply ignored in Consolidation.

One of the advantages of posting eliminating entries in the functional currency, YEN in this example, is that the Reporting Ledgers use the same multicurrency translation rules in Management Reporter as the General LeDger.

What works best is based on your specific reporting needs. In the following example, the General Ledger was used to record the Cost-Based Transfer Pricing entries and the LOCAL Reporting Ledger was used to eliminate Transfer Pricing in the Consolidated Income Statement. In this example Japan manufactures product that is sold by USA Company.

The elimination entry made in Japan is recorded in YEN and converted to USD for Consolidation. The elimination entry made in USA is in US$.

Included at the bottom of this report is the effect on the Intercompany Accounts. By using the Japan Company reporting ledger in its functional currency, YEN, the balance sheet account is translated at the required Month End rate resulting in an Intercompany balance of $0 in consolidation.

Summary

Managing elimination entries for multiple subsidiaries requires more than just a link to an Excel spreadsheet. With the increased focus on audit trails and internal controls for SOX compliance, Dynamics GP’s addition of Reporting Ledgers provides the needed controls for Consolidation Accounting.

This white paper is intended for Accounting and Financial users and consultants that are responsible for producing consolidated financial statements in Dynamics GP and Management Reporter.

Request a free copy “Eliminations and Adjustments using Reporting Ledgers in Microsoft Dynamics GP® and Management Reporter” at http://unifiedbiz.com/eliminations-gp-mr/