Finance Demo Script - Consolidations

MICROSOFT DYNAMICS AX 2012 R2:
FINANCIAL CONSOLIDATIONS,
ELIMINATIONS, FOREIGN
CURRENCY AND IFRS REPORTING
January 2013
Version 1
Table of Contents
FINANCIAL CONSOLIDATIONS .................................................................................................................................. 3
INTRODUCTION .......................................................................................................................................................... 3
AUDIENCE ..................................................................................................................................................................... 3
SCENARIO...................................................................................................................................................................... 4
PROBLEMS THIS DEMO ADDRESSES .................................................................................................................. 4
KEY PAINS THIS DEMONSTRATION ADDRESSES ........................................................................................... 4
KEY COMPETITIVE POINTS ...................................................................................................................................... 5
DEMO PRESET CONFIGURATION ......................................................................................................................... 5
BEFORE YOU BEGIN ................................................................................................................................................... 5
DEMO OVERVIEW....................................................................................................................................................... 7
CONCLUSION............................................................................................................................................................ 45
DISCLAIMER ............................................................................................................................................................... 46
Microsoft Dynamics AX 2012R2: Financial Consolidations, Eliminations, Currency Revaluations, IFRS Reporting
FINANCIAL CONSOLIDATIONS
INTRODUCTION
Microsoft Dynamics AX Financial Consolidations functionality allows users to combine
the financial results for several subsidiary companies into results for a single,
consolidated company. The subsidiaries can be in the same Microsoft Dynamics AX
database or in separate databases.
If the data for subsidiaries is recorded in foreign currencies, you can consolidate financial
results in compliance with Regulation FASB 52 of the Generally Accepted Accounting
Principles (GAAP). The GAAP are created and interpreted by the Financial Standards
Accounting Board (FASB) and the International Accounting Standards (IAS).
Depending on the translation method that is required in your country/region, you can
select different exchange rates for the various types of ledger accounts in the
consolidated company. You can also specify the account in the consolidated company to
which exchange differences are posted.
AUDIENCE
The demonstration in this document should be used to show the value of AX 2012 R2
Consolidations to a business decision maker (BDM) and accounting personas. The
following role examples represent key decision makers, selection process personnel and
influencers and/or evaluators:
CFO (Sara): Sara develops the financial plan and goals for the company and
continuously monitors performance against them. Others rely on her to assess
the financial viability of opportunities. Sara relies on Ken and Phyllis to provide
her with the information she needs for business insight.
Controller (Ken): Ken tracks the departments financial goals and continually
improves processes to achieve financial goals. He proposes and helps implement
changes to optimize performance. He may approve documents and payments.
Accounting Manager (Phyllis): Phyllis manages the accounting department by

processing general ledger transactions, reviewing and approving transactions,
and reviewing aging reports. She also ensures that her team accurately completes
financial procedures on time.
Accountant (Cassie): In an external role, Cassie either does the books (for a
small business), or audits the books (for any size company). In an internal role as
an employee, Cassie takes care of accounting duties within a complex finance
department.
SCENARIO
In Microsoft Dynamics AX 2012 R2, a consolidation (parent) company is created to report
financial results for a group of companies. A consolidation company called Contoso
Entertainment System, or GLMF, is one of the consolidation companies created in the
Microsoft Dynamics AX 2012 R2 demo data for this purpose. The financial data from the
subsidiary companies is consolidated into the GLMF company, and then a financial
report is created using the combined data. In this demo, Contoso Entertainment System
USA (USMF) and Contoso Entertainment System Germany (DEMF) are wholly-owned
subsidiaries within the Contoso Entertainment Group of companies. USMF and DEMF do
transact with each other and require intercompany eliminations during the consolidation
process.
PROBLEMS THIS DEMO ADDRESSES

The ability to easily consolidate subsidiary company transactions into a single
consolidated (parent) while supporting intercompany eliminations, foreign currency
revaluation and consolidated financial reporting in accordance with the different GAAPs
(e.g. US GAAP and IFRS).
KEY PAINS THIS DEMONSTRATION ADDRESSES

This demonstration shows how Microsoft Dynamics AX Financial Consolidations can help
address pain points that business users of a business application might experience:
Business
Key Pains Microsoft Dynamics AX 2012 R2 helps to address
User
Ken
(Controller)
I need to be able to create consolidated financial statements

quickly and easily and without a lengthy training on the
application.
Phyllis
(Accounting
Manager)
I need a consolidation tool that will allow me to easily process

all our subsidiary transactions and bring them into the
consolidated group at the proper exchange rates, with proper
elimination and adjustments reflected on the consolidated
financial statements.
Cassie
(Accountant)
I need to be able to process intercompany eliminations and

make sure they do not cause out-of-balance situations during
the consolidation process, otherwise I am left to manually
reconcile these transactions.
KEY COMPETITIVE POINTS
Flexible consolidation tool: Easily bring subsidiary transactions into the

consolidation company using specified exchange rates, based on user-defined
exchange rate types. Ability to run consolidations when and as needed, with
ability to remove transactions should the need arise. Ability to view consolidation
transactions through on-line consolidation inquiries. Rules-based elimination
rules provide flexibility in elimination processing.
Support of IFRS reporting requirements: Ability to support IFRS reporting

needs through the power of Dynamics AX build-in posting layers.
Foreign currency revaluation capabilities
DEMO PRESET CONFIGURATION

This script was written to work with the Microsoft Dynamics AX 2012 R2 Virtual Machine
(VM), released in December 2012. Make sure that the VM is up and running and you
have logged on. The script addresses key pain points and challenges that different roles
might face. However, the demo can be completed as the system administrator.
Domain: CONTOSO
User: Administrator
Password: pass@word1
BEFORE YOU BEGIN
Demo Pre-Setup
1. Start Microsoft
Dynamics AX 2012
Open Microsoft Dynamics AX 2012 R2 and verify you are

logged into the USMF company.
R2
2. Main accounts
form
Create 2 new main accounts in the Shared chart of

accounts (General ledger > Setup > Chart of accounts >
Chart of accounts):
o
300180 Reserve for Intangible Asset Revaluation
Main account type = Equity
120250 F/X Investment Account
Main account type = Asset
Foreign currency revaluation = Selected
3. IFRS
adjustment
journal
Create a new journal name (General ledger > Setup >

Journals > Journal names) called IFRS Adj.
o
Journal type = Daily
Create a new voucher series for this journal

name (right click in field and select View details)
Number Sequence Code = IFRSAdj
Scope = Company
Company = USMF
Segments: Remove Company segment

and change the Constant to IFRS-
o
4. General
journal entry
and Opening
transactions
General: Mark as Continuous.
Set the posting layer = Operations.
For USMF: Re-open Period 12 Operating period for year

2011 and Periods 1-6 for year 2012 in the calendar
(General ledger > Setup > Ledger > Ledger calendar).
For DEMF: Re-open Periods 1-6 for year 2012 in the
calendar (General ledger > Setup > Ledger > Ledger
calendar).
Record and post a journal entry in USMF for December 20
of 2011:
o
Journal name: GenJrn
Primary account: 180140; BusinessUnit = 001
Debit amount: 250.00
Offset account: 300180; BusinessUnit = 001
Re-process the Opening transactions function in USMF (as

you posted a journal entry into the prior year). This will
bring the balances forward. General ledger > Periodic >
Fiscal year close > Opening transactions.
5. Consolidations
End date: 12/31/2011
Voucher number: 2011_ADJ
Add the following account structures to the ledger in

GLMF company (General ledger > Setup > Ledger):
o
Manufacturing B/S
Manufacturing P&L
DEMO OVERVIEW
This demo introduces the basic steps required to do a financial consolidation in
Microsoft Dynamics AX 2012 R2. This demo provides an overview of the major concepts
to introduce you to key features and enhanced features that are available to users of the
financial consolidation feature in AX 2012 R2.
DEMO 1: SUBSIDIARY COMPANY SETUP

Scenario and Background
In Microsoft Dynamics AX 2012 R2, a consolidation (parent) company is created to report financial
results for a group of companies. A consolidation company called Contoso Entertainment System, or
GLMF has been created for this purpose. The financial data from the subsidiary companies is
consolidated into the GLMF company, and then a financial report is created by using the combined
data. In this demo, Contoso Entertainment System USA (USMF) is a wholly-owned subsidiary within
the Contoso Entertainment System group of companies.
In this demo, USMF and GLMF both share the same chart of accounts. However, if the chart of
accounts in the subsidiary legal entity does not follow the chart of accounts in the consolidated legal
entity, you can map the main accounts in the subsidiary to the main accounts in the consolidated
legal entity.
In this scenario, Phyllis, the accounting manager, will map a main account to a default consolidation
account.
1. In USMF, navigate
to the Main
accounts list page
(General ledger >
Common > Main
accounts).
2. Search for main
account 120250
and select to Edit
from the action
pane.
3. In the Default
consolidation
account field,
enter 1111 to
which the balance
of this account will
be transferred to in
the consolidated
legal entity.
4. Close the form.
In the scenario where the organization wants to use a shared chart of accounts across all legal entities but has
requirements for local reporting using a different chart of accounts for more than one other chart of accounts,
there is the option to set up consolidation account groups (General ledger > Setup > Chart of accounts >
Consolidation account groups). These user-defined groups provide support to map a single main account
value to multiple consolidation accounts (General ledger > Setup > Chart of accounts > Additional
consolidation accounts).
To prepare reports and financial statements for the consolidated legal entity that are based on financial
dimensions, if the consolidated legal entity financial dimensions are different than the subsidiary legal
entity financial dimensions, map the financial dimensions using the Group dimension field in the Financial
dimension values form (General ledger > Setup > Financial dimensions > Financial dimensions > Financial
dimension values). This mapping is similar to the previous steps of mapping a consolidation account to a
main account.
Definition of the subsidiary companys accounting and reporting currency, as well as default
realized/unrealized gain/loss accounts and default exchange rate types can be found on the Ledger form
(General ledger > Setup > Ledger).
Unrealized gain/loss accounts: Defined as the system account for currency exchange revaluation
adjustments resulting in a gain or loss against the companys accounting currency. In the source company,
this typically is a P/L account. In the consolidation company, it is typically a CTA (cumulative translation
adjusmtent account in equity) account.
Realized gain/loss accounts: Defined as the system account for currency exchange adjustments resulting in
a gain/loss when settling transactions such as customer or vendor payments against invoices. In the
consolidation company, realized gain/loss amounts are not applicable as you cannot record payments and
invoices in a consolidation company. Only elimination entries and closing sheet adjustments are allowed.
5. Navigate to the
Ledger form
(General ledger >
Setup > Ledger)
6. Note that the
accounting
currency and the
reporting currency
are set as USD for
USMF.
7. Close the form.
Exchange rate types allow users to define different exchange rates for the same pair of currencies, such as
CAD to USD or USD to EUR. Exchange rates need to be defined for all currencies that the company
transacts in.
A currency pair (From currency and To currency) can only be defined once for the same rate type. For
example, if you set up exchange rates from USD to CAD, you will not be able to set up exchange rates for
CAD to USD in the same rate type. The system will automatically calculate and use the reciprocal exchange
rate when converting CAD to USD in this scenario.
The reciprocal rate is calculated as (Quotation unit/Exchange rate).
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8. Navigate to the
Currency exchange
rates form
(General ledger >
Setup > Currency
> Currency
exchange rates).
9. Select the
Exchange rate type
of Default.
10.
Note that the
exchange rate for

USD to CAD is
102.7900 as of 1/1
2012. If a
transaction was
entered USMF in
CAD currency, the
system would
calculate the
reciprocal as
.9728572
(100/102.7900).
11.
Close the
form.
To view the currency exchange calculation, enter a journal entry in CAD currency. USD is the accounting
currency for USMF.
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12.
Navigate to
the General journal

(General ledger >
Journals >
General journal)
13.
Click New.
14.
Select GenJrn
as the journal
name.
15.
Click Lines.
16.
Set the date
to 1/1/2012.
17.
Enter the
primary account as
120250-001-023.
18.
Enter debit
amount of 100.00.
19.
Enter the
offset account as
250200-001-023.
20.
Change the
Currency to CAD.
21.
Go to the
General tab and

verify the exchange
rate is displaying
the reciprocal rate.
22.
Post the
journal entry and

close the forms.
After posting the journal entry, you can view the posted journal entry.
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23.
Go to the
Main accounts list

page (General
ledger > Common
> Main accounts).
24.
Search for
main account
120250.
25.
Select Posted
journal entries
from the action
pane.
26.
Note the
Amount in
transaction
currency (CAD) is
100.00 and the
Amount in
accounting
currency (USD) is
displayed as 97.29
in the Amount
column.
This demo provided an overview of the primary components of the subsidiary company setup that will be
used in a later demo on financial consolidation.
END OF DEMO SCENARIO 1
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DEMO 2: FOREIGN CURRENCY REVALUATION (IN THE SUBSIDIARY COMPANY)

When you use multiple currencies, the exchange rate to convert the transaction currency to the
accounting currency can differ over time. To recognize the exchange rate differences, the accounting
currency (and/or reporting currency) amounts need to be adjusted with an unrealized gain or loss in
currency revaluation being recorded in the general ledger. The process that is used to make those
adjustments is called a foreign currency revaluation.
Microsoft Dynamics AX 2012 R2 supports foreign currency revaluation in the Accounts Payable,
Accounts Receivable and the General ledger. In this scenario, Phyllis, the Accounting Manager, will
use the Foreign currency revaluation form to complete a foreign currency revaluation for the
general ledger. She starts by verifying and/or updating the exchange rates.
1. Navigate to the
Currency
exchange rates
form (General
ledger > Setup >
Currency >
Currency
exchange rates).
2. Select the Default
exchange rate type.
Find the USD to
CAD currency pair
and note that the
exchange rate as of
1/1/2012 is
102.7900.
3. Add a new
exchange rate with
a start date of
1/31/2012 and a
rate of 101.00.
4. Close the form.
Phyllis will now run the foreign currency revaluation to adjust main account 120250 F/X Investment
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Account.
5. Navigate to
General ledger >
Periodic > Foreign
currency
revaluation.
6. Specify 120250 as
both the From and
To Main account.
7. Specify a date
range of 1/1/2012
to 1/31/2012.
8. Specify CAD as
both the From and
To Currency code.
9. Select the Adjust
balance sheet
accounts option.
10.
Click OK to
revalue the
selected main
account.
When the revaluation process is finished, balances that are in the accounting currency are updated to use
the currency exchange rate. An adjustment is also made for the reporting currency amount if the exchange
rate is different. For this demo, since the reporting currency is also USD, and adjustment has been made to
both the accounting currency and reporting currency amounts.
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11.
Go to the
Main accounts
list page
(General ledger
> Common >
Main accounts).
12.
Search for
main account
120250.
13.
Select
Posted journal
entries from the
action pane.
14.
Select the last
entry (should be
the default
selection). The
amount in the
Amount column
is the foreign
currency
revaluation
adjustment amount
for the accounting
currency. A
separate entry
displays for the
adjustment to the
reporting currency
amount.
The offset account posted to with the foreign currency revaluation process is to the unrealized gain or loss
account defined on either the currency revaluation accounts form or the ledger. The system will first look to
the accounts defined on the currency revaluation accounts form as that is the most granular. If an account
does not exist, the system will then look to the ledger for the correct account to use as the offset.
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15.
Select
Voucher from
the action pane.
16.
Click on the
Ledger account
column to sort
the data.
17.
Note the
entry to the
unrealized gain
account.
18.
In the last
column, the
posting layer for
each entry is
displayed. In this
scenario,
Current is
displayed, which
is the typical
layer used for
posting entries
for local GAAP
reporting. The
consolidation
process will pull
in the entries by
posting layer.
19.
Close the
voucher form.
20.
Close the
Account number
form.
Note: Demo
Scenario 3 covers
the topic of posting
layers as they relate
17
to IFRS reporting
requirements.
This demo provided an overview of the foreign currency revaluation process in the USMF subsidiary
company.
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DEMO 3: IFRS REPORTING

IFRS and US GAAP are two different standards for financial reporting. IFRS are generally more principles-based
than the US rules-based approach. Convergence of the two sets of accounting rules is a high priority on the
agendas of both the US Financial Accounting Standards Board (FASB) and the International Accounting Standards
Board (IASB).
Numerous changes have already occurred which bring the two standards together, yet differences still exist. For
example, the accounting treatment of intangible assets is an area where significant differences exist between US
GAAP and IFRS. Under US GAAP, revaluation of intangible assets is not permitted whereas under IFRS, revaluation
to fair value of intangible assets other than goodwill is permitted.
Microsoft Dynamics AX 2012 R2 currently supports the notion of multi-book via the use of posting layers. There
are 3 posting layers in Dynamics AX: one primary and two adjustment layers. Dynamics AX customers are utilizing
the Current layer for local GAAP reporting. The Operations layer is typically used for adjustments to comply
with IFRS and the Tax layer for adjustments related to tax reporting.
1. Navigate to the Trial balance list
page (General ledger >
Common > Trial balance)
2. Click Parameters from the
action pane. Note that the
posting layer currently shown is
Current.
3. Change the Posting layer to
Only operations, make sure
the date range is 1/1/2012
12/31/2012, and click Update.
4. At this point of the demo, there
are no operation layer journal
entries posted.
In this scenario, Phyllis, the accounting amanager, will post an IFRS adjustment to account for an intangible asset
revaluation. To do this, she will use a journal set up specificially for IFRS adjustments.
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5. Navigate to journal set

(General ledger > Setup >
Journals > Journal names).
6. Select IFRS Adj.
7. Note that the Posting layer
field is set to Operations.
8. Close the form.
For intangible asset revaluations, the difference between the revalued amoutn and the net book value is posted to a
reserve account. An equity account 300180 (Reserve for Intangible Asset Revaluation) is already created for this demo
Increase in asset value is to a balance sheet account, a decrease in asset value is to a P/L account.
9. Navigate to General journal
(General ledger > Journals >
General journal).
10.
Select to create a new
journal IFRS Adj.

11.
Click Lines.
12.
Enter the following:

a. Date: 1/31/2012
b. Account: 180140
001
c. Debit: 10,000.00
d. Offset account:
300180-001
13.
Post the journal entry.
14.
Close the infolog.
15.
Close the journal forms.
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16.
Navigate back to the
Trial balance list page

(General ledger > Common
> Trial balance). You should
now see the adjustment
amounts just posted as the
Trial balance list page
parameters should
remember last setting. You
may need to Refresh the list
page if you had not
navigated away when doing
the journal entry.
17.
Open the Parameters
form from the action pane.

18.
Change the Posting
layer to Total.
19.
Click Update.
20.
Filter the list page to
main account 300180.

21.
The system is now
displaying the complete IFRS

trial balance for this account
(Current + Operations =
Total IFRS). (The Opening
balance is the beginning
balance for the Current
21
layer in this demo.)

This demo showed, in a matter of minutes, the creation of an IFRS trial balance sheet using the Dynamics AX posting
layers in order to create financial reports that meet IFRS reporting requirements.
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DEMO 4: INTERCOMPANY TRANSACTIONS AND ELIMINATIONS

Intercompany transactions are used to process transactions between companies.
Users have the ability to setup predefined elimination rules in order to create elimination transactions in a
company specified as the destination company for eliminations (i.e. elimination company). The elimination
journals can be generated during the consolidation process or using an elimination journal proposal.
Elimination transactions are required when doing consolidated financial reporting if any of the companies
being consolidated do business with each other. Some of the transactions that occur between the companies
must be eliminated. Examples include intercompany sales and intercompany purchases. The consolidated
financial reports cannot recognize revenue and expenses that occur due to business transactions that
between companies within the consolidated organization.
In this scenario, Cassie records an intercompany transaction to transfer advertising expense from the USMF
subsidiary company to DEMF company. This intercompany transaction will be eliminated during the
consolidation process.
The following demo creates a general journal entry to demonstrate how an intercompany transaction works.
Company USMF is going to transfer an advertising expense to company DEMF. The advertising expense account in
company USMF will be credited and the advertising expense account in company DEMF will be debited. Each
company will have an intercompany account that is used for the offset of the transaction to keep each company
balanced (due to/due from entries).
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1. Navigate to the
General journal
(General ledger >
Journals > General
journal).
2. Select to create a
new journal IntJrn
3. Click Lines.
4. Enter the following:
a. Date:
1/15/2012
b. Account:
601300-001022- c. Credit amount:
1,000.00
24
5. Click on the General

tab
6. Select Offset
company accounts
of DEMF.
7. Enter in Offset
account of 601300001-022 - (USMF
and DEMF use the
same chart of
accounts).
8. Post > Post
9. Microsoft
Dynamics AX will
create 2 journal
entries one in
each company.
10.
Close the
infolog.
25
11.
Click Inquiries
> Voucher from

the Journal
voucher form.
12.
Select the first
line.
13.
The system
automatically
created the
Intercompany Due
from entry in
USMF.
14.
A similar entry
has been created in

DEMF for the
Intercompany Due
to entry.
15.
Close the
Voucher
transactions form.
16.
Close the
Journal voucher
and Journal forms.
Lets next take a look at the elimination rules.
Navigate to GLMF company for the next steps.
26
17.
Navigate to
General ledger >

Setup > Posting >
Ledger
elimination rules.
18.
Select to
create a new
elimination rule.
19.
Give the rule a
name for
example,
Intercompany
Advertising.
20.
Enter GLMF as
the Destination
company. This
must be a legal
entity set up as an
elimination
company.
21.
The Active
checkbox indicates
whether the
elimination rule is
available for
processing. Select
to activate this rule.
22.
In the Journal
settings section,
there must be a
journal Name that
has the type equal
to elimination in
order to process
successfully. Select
ElimJrn.
Select Lines. On the lines form, you enter additional information for the elimination rule, such as the elimination
27
method, source and destination accounts, and dimension information.

There are 2 Elimination methods that can be selected:
Net change: Eliminates an accounts net change for a specified date range. This is the most common
elimination method.
Fixed amount: Eliminates a specified amount for an account. With this method, a manual process
determines the fixed amount to elmininate for an account.

23.
Select New.
24.
We will keep
the Elimination
method as Net
change for this
demo.
25.
Enter the
source accounts to
eliminate. We will
enter two lines
one for account
133300 and
another for
231300.
Additional setup can be done if necessary to specific specific dimensions to eliminate or to eliminate to specific
destination accounts.
This demo showed the setup of an elimination rule. There are 2 ways to actually create elimination journal entries.
There is the Elimination journal proposal method, which you do under General ledger > Journals > Elimination
journals from within the elimination company (such as GLMF). This method of processing an elimination rule may
be preferrred if you first must consolidate data, confirm the data in the consolidation cmopany is accurate, and then
run a separate elimination journal proposal to create, preview and validate or approve the elimination journal
entries.
Or elimination can be created during the Consolidate online process in a consolidation company that is also set up
as an elimination company. This may be preferred if consolidations are simple and the ease of a one-step process is
desirable. Demo Scenario 5 will process the elimination rules during the consolidation online process.
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29
DEMO 5: CONSOLIDATE ONLINE

In a consolidation, you gather transactions from several sets of legal entity accounts into a single set of
legal entity accounts. You can print reports, such as financial statements, from the consolidated legal
entity. However, you cannot use the consolidated legal entity for daily transactions and only summarized
journal entries (per ledger account per day) will be created as part of this process.
You can consolidate data from legal entities that use different databases than the database for the
consolidated legal entity. This consolidation process is referred to as an import consolidation. To import
the financial results for these subsidiaries into results for a consolidated company, you must create
comma-delimited export files that contain the correct information. In an export or import consolidation,
the subsidiary legal entities are in different databases than the consolidated legal entity. The subsidiary
data is exported to files that are created automatically (if created through the export consolidation
process). Those files are then imported into the database of the consolidated legal entity.
Alternatively, online consolidation is a consolidation tool where the subsidiary legal entities are in the
same database as the consolidated legal entity.
Before you perform a consolidation at the close of a period, ensure that the period closing preparatory
activities are performed, but do not close the subsidiary accounts until the consolidation is completed.
In order for a company to be recognized as a consolidation company, a setting must be made on the
Legal entities form for the company.
1. Navigate to the Legal
entities form (General
ledger > Setup >
Organization >
Legal entities).
2. Find and select
Contoso
Entertainment
System (GLMF).
3. Note the Use for
financial
consolidation
process checkbox is
marked.
4. Consolidated financial
30
statements must only

include transactions
that occur between
the consolidated
entity and the other
entities outside the
consolidated group.
Because of this
requirement,
transactions between
companies being
consolidated, such as
intercompany sales or
receivables, must be
eliminated. Note the
Use for financial
elimination process
checkbox is marked
for GLMF.
5. Close the Legal
entities form.
Lets take a look at the ledger setup for GLMF. Here you can note the chart of accounts, the fiscal calendar, the
accounting currency, an optional reporting currency, and the default exchange rate type for the consolidated
legal entity.
31
6. In GLMF, Navigate to
General ledger >
Setup > Ledger.
7. Close the Ledger
form.
Exchange rate types allow the setup of different exchange rates for the same from and to currency (currency
pair). Exchange rate types are available for use with consolidation to provide support for IAS 21 and FASB 52.
For example, you can use a rate type that represents the average exchange rate for the period when
consolidating P/L accounts and a rate type that represents the closing exchange rate for the period when
consolidating balance sheet accounts.
The currency translation process when consolidating DEMF into GLFM is EUR to USD.
32
8. Navigate to
General ledger >
Setup > Currency
> Currency
exchange rates.
9. Select Default as
the Exchange rate
type.
10.
Find the
currency pair of
USD to EUR.
11.
Note that the
exchange rate as
of 1/1/2012 is
81.24 (or 81.24
EUR for 100 USD).
12.
Close the form.
You must set up a Conslidation systems account to automatically post differences resulting from using different
rate types for different accounts when consolidating companies into the conslidation company. In the next step,
we are setting the Posting type field to Balance for conslidation differences and selecting an equity account
as required by FASB 52.
33
13.
Navigate to
General ledger >

Setup > Posting >
Accounts for
automatic
transactions.
14.
Select the
record for Balance

account for
consolidation
difference. Put
focus in the Main
account field and
right click > View
details.
15.
Select to create
a New main
account.
a. Main account:
333333
b. Name: F/X
Cumulative
Translation
c. Main account
type: Equity
d. Close the form
16. Change the Main
account selected
to the new
333333.
17. Close the form.
Lets take a look at performing a consolidation.
Microsoft Dynamics AX 2012 R2 supports the following options to perform consolidations:
Consolidate [Export to]

o
This is used when the subsidiary company is in a different database when the consolidation
company.
34
Summarized general ledger data is exported from the subsidiary company to a comma-delimited
file.
Consolidate [Import from]

o
This is used to perform the import to bring the subsidiary comma-delimited file data into the
consolidated company.
Consolidate [Online]
o
This is used to perform the consolidation when the subsidiary company (or companies) is in the
same database as the consolidation company.
This demo will use the Consolidate [Online] functionality.

18.
In GLMF,
Navigate to
General ledger >
Periodic >
Consolidate >
Consolidate
[Online].
19.
On the Criteria
tab, specify a range

of main accounts to
consolidate (for
example, 110110 to
999998)
20.
Select Use
consolidation
account to use the
default
consolidation
account previously
21.
Select Main
account as the
Select
consolidation
account from
option.
22.
Specify a date
range for
consolidation, such
35
as 1/1/2012 to
1/31/2012.
23.
Select to
Include actual
amounts.
If using consolidation account groups and you want to consolidate using the consolidation account, set the Select
consolidation account from option to Consolidation account group and select the appropriate Consolidation
account group.
On the Financial dimensions tab, all financial dimensions defined in the system will default as lines in the grid.
Under the specification column, speciy how the financial dimensions should consolidate from the subsudiary.
Options include
None
o
No financial dimension values will consolidate for the specific financial dimension
Dimension
o
The specific financial dimension value of the ledger account will consolidate for the specific
financial dimension (as it was posted in the subsidiary)
Group dimension
o
The financial dimension value will consolidate into the specified Group dimension value entered
for the specific financial dimension value (similar to consolidation account)
Company accounts
o
The financial dimension value for the specific financial dimension will be the company account
for the specific amount (for example, USMF or DEMF). This is helpful in determine which
subsidiary company the amount originated from.
Account
o
This option will display the main account fo the original subsidiary transaction. This is helpful
when consolidating from a different chart of accounts than what is used in the consolidation
company.
36
24.
Select the
Financial
dimensions tab.
On the Legal entities tab, enter a line for each subsidiary company to be consolidated. Indicate the percentage
of ownership and whetehr the exchange differences post to a balance sheet or a profit and loss account.
Share: Indicates the percentage of the selected company accounts to be included in the consolidation. In this
scenario, USMF and DEMF are wholly owned subsidiaries of GLMF.
For the selected subsidiary company account, if the subsidary company currency differens from that of the
consolidated company, users can specify the type of account that consolidation differences are posted to:
Profit & Loss Differences are posted to the consolidated company ledger account that is indicated for
the Profit & Loss account for consolidation differences in the Accounts for automatic transactions form
in the consolidation company.
Balance Differences are posted to the consolidated company ledger account that is indicated for the
Balance account for consolidation differences in the Accounts for automatic transactions form in the
consolidation company.
The translation method that your organization should use depends on the relationship of the foreign
subsididary to the core business fo the consolidated legal entity. The translation method also depends on the
accounting practies of the country/region in which the consolidated legal entity is located.
37
25.
Select the
Legal entities tab.

26.
Select a new
Source legal entity

DEMF with a 100%
share and select
Balance as the
account type for
conversion
differences
27.
Select a new
Source legal entity

USMF with a 100%
share and select
Balance as the
account type for
conversion
differences.
On the Description tab, optionally enter a meaningful description for the consolidation.
38
28.
Select the
Description tab.
29.
Type in
January 2012
Consolidation
On the Elimination tab, enter one or more elimination rules you want to process as part of the consolidation
function.
You can run elimination rules in a propodal mode to perform what-if analysis. This would be considered a twostep process.
Proposal only: Elimination journals are created and can be viewed after running the consolidation process.
Post only: Elimination journals are created and posted as part of the consolidation process.
39
30.
Select the
Elimination tab.
31.
Set Proposal
options to Proposal
only.
32.
Set the GL
posting date to
1/31/2012.
33.
Click New in
the grid and add

Intercompany
Advertising (the
rule previously
created).
The consolidation process uses the exchange rate types defined for the range of accounts indicated if you want
to use a different exchange rate than what is set up for the consolidation companys ledger.
You can also select the date that is used to determien the exchange rate to use: Consolidation date the date
of the consolidation or the Transaction date, the date of the original transaction being consolidated.
40
34.
Select the
Currency
translation tab.
35.
Select a New
record in the grid

and select DEMF as
the Source legal
entity.
36.
Enter a range
of accounts:
110110 to 169999
37.
Select
Exchange rate type

of Default with and
Exchange rate date
of Consolidation
date
38.
Enter the
remaining 3
records:
a.
DEMF;
170150
199999;
Default;
Transaction
date
b.
DEMF;
200100
399999;
Default;
Consolidation
date
c.
DEMF;
401100
803200;
Average;
Consolidation
41
date
Consolidations can be run in batch mode or they can be processed immediately. Select OK to process the
consolidation. Since we don't have consolidation accounts mapped to all the main accounts, you will receive
messages for the accounts telling you which account it used instead. Close the infolog.
Now that the consolidation process is complete, we can review the consolidation entries that were created.
39.
In GLMF,
Navigate to
General ledger >
Inquiries >
Consolidations
40.
Click the
Created date and

time column twice
to sort the list
The Overview tab provides a list of all the consolidations created. In addition to the information on the
Overview tab, the General tab displays the time the consolidation record was created as well as the user ID of
the person who created the consolidation.
There may be times when it is necessary to remove conslidation transactions. For example, consolidating the
accounts of various subsidiaries can be time-consuming, and sometimes the records that were created for one
subsidiary must be revised. Instead of repeating the consolidation for all the subsidiaries, you can delete the
consolidation records that were created for a particular subsidieary and run the consolidation for just that
subsidiary again. In this case, you would click the Remove transactions button.
The Transactions button has options of Actuals or Budget. This enables the display of the journal entries
created as part of the specific consolidation record.
42
41.
Select the
January 2012
Consolidation
record for USMF.
42.
Select
Transactions >
Actuals. Here you
can see all the
summarized journal
amounts created
from the USMF
subsidiary that were
created in GLMF.
43.
You can view
the transactions for

the DEMF
consolidation as
well.
A few things to note:
1. During consolidation, each subsidiary companys accounting currency amoutn is brought over as the
transaction currency in the consolidation cmopany and is then translated to the consolidation
companys accounting currency.
2. Posting to the cumulative translation (equity) account is to account for differences in the exchange rates
used.
3. Financial dimension segment order is per the segmentes defined on the Financial dimensions tab of the
consolidation form.
4. The consolidation process does not include the beginning balances in the consolidation company. As a
result, you will need to perform a year-end closing (Opening transactions process) in the consolidation
company and run the exchange adjustment process to adjust the beginning balances.
Next, lets review the results of the elimination proposal that was created during the consolidation process.
43
44.
Navigate to
General ledger >

Journals >
Elimination
45.
Select the
existing journal in
the list
46.
Click Lines.
47.
For this demo,
you should see two

lines. One line is for
1,000 USD and the
other line is for
812.40 EUR. The
journal is balanced
in USD.
Elimination journals support workflow. If workflow was set up for this journal, Cassie could submit to Phyllis for
approval prior to posting. This demo does not have workflow set up so select Post > Post to post the
elimination journal. Close the forms.
This demo walked through using conslidation online functionality and processing an elimination rule.
44
CONCLUSION
These demonstrations have guided you through the capabilities of Microsoft Dynamics
AX 2012 R2 Financial Consolidations.
45
DISCLAIMER
2013 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista, Microsoft Dynamics and other
product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. Other names
and brands may be claimed as the property of others.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of
the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be
interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information
provided after the date of this presentation. Microsoft may make changes to specifications and product descriptions at
any time, without notice.
Sample code included in this presentation is made available AS IS. THE ENTIRE RISK OF THE USE OR THE
RESULTS FROM THE USE OF THIS CODE REMAINS WITH THE USER.
MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS
PRESENTATION. NO LICENSE, EXPRESS OR IMPLIED, BY ESTOPPEL OR OTHERWISE, TO ANY
INTELLECTUAL PROPERTY RIGHTS IS GRANTED BY THIS PRESENTATION. Microsoft products are not intended
for use in medical, life saving, or life sustaining applications.
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people
to make business decisions with greater confidence. Microsoft Dynamics works like and with familiar Microsoft software,
automating and streamlining financial, customer relationship and supply chain processes in a way that helps you drive
business success.
U.S. and Canada Toll Free 1-888-477-7989

Worldwide +1-701-281-6500
www.microsoft.com/dynamics
46

Finance Demo Script - Consolidations

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Finance Demo Script - Consolidations

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MICROSOFT DYNAMICS AX 2012 R2:

Accounting Manager (Phyllis): Phyllis manages the accounting department by

PROBLEMS THIS DEMO ADDRESSES

KEY PAINS THIS DEMONSTRATION ADDRESSES

Key Pains Microsoft Dynamics AX 2012 R2 helps to address

I need to be able to create consolidated financial statements

I need a consolidation tool that will allow me to easily process

I need to be able to process intercompany eliminations and

KEY COMPETITIVE POINTS

Flexible consolidation tool: Easily bring subsidiary transactions into the

Support of IFRS reporting requirements: Ability to support IFRS reporting

Foreign currency revaluation capabilities

DEMO PRESET CONFIGURATION

BEFORE YOU BEGIN

Open Microsoft Dynamics AX 2012 R2 and verify you are

Create 2 new main accounts in the Shared chart of

300180 Reserve for Intangible Asset Revaluation

Main account type = Equity

120250 F/X Investment Account

Main account type = Asset

Foreign currency revaluation = Selected

Create a new journal name (General ledger > Setup >

Journal type = Daily

Create a new voucher series for this journal

Number Sequence Code = IFRSAdj

Segments: Remove Company segment

General: Mark as Continuous.

Set the posting layer = Operations.

For USMF: Re-open Period 12 Operating period for year

Journal name: GenJrn

Primary account: 180140; BusinessUnit = 001

Debit amount: 250.00

Offset account: 300180; BusinessUnit = 001

Re-process the Opening transactions function in USMF (as

End date: 12/31/2011

Voucher number: 2011_ADJ

Add the following account structures to the ledger in

DEMO 1: SUBSIDIARY COMPANY SETUP

Note that the

exchange rate for

the General journal

Set the date

General tab and

journal entry and

Main accounts list

DEMO 2: FOREIGN CURRENCY REVALUATION (IN THE SUBSIDIARY COMPANY)

Select the last

DEMO 3: IFRS REPORTING

5. Navigate to journal set

Select to create a new

journal IFRS Adj.

Enter the following:

Post the journal entry.

Close the infolog.

Close the journal forms.

Navigate back to the

Trial balance list page

Open the Parameters

form from the action pane.

Change the Posting

Filter the list page to

main account 300180.

The system is now

displaying the complete IFRS