PARALLEL LEDGERS:

Parallel accounting is useful to address the different accounting principles and also for reporting
purpose.

Parallel Ledgers: To address each accounting principle wise. For example, we have one company
code in India. The parent company code is location in Europe. The Europe company maintain
relation to US company.

In this case, The Europe company (Parent Company) should maintain data as per Indian accounting
standard wise as well as American standard wise.

In this case, we need to maintain 3 ledgers, out of which one should be leading ledger. In this case
we select Poland (IFRS) is leading ledger nothing but parent company.

For one company we can maintain one leading ledger. But we can maintain n number of leading
ledgers.

Leading ledger only integrated with controlling and logistics modules.

Non leading ledger is not integrated with controlling and logistics modules. For non leading ledger
we can have different fiscal year and posting period variant. But currency will follow similar to
leading ledger wise.

Normally day to day transactions will update in all ledgers (i.e. leading and aswell as non leading
ledgers). Some of the transactions we post to only specific ledgers, at that time we need to
specify that particular ledger then we can post.

Configuration Steps:

 Define ledgers for general ledger accounting.

 Define currencies for leading ledger: As per company code currency by default it will take
1st local currency. For each ledger maximum, we can have 3 currencies (.e. one local
currency and 2 additional currencies). The additional currencies might be index currency
or group currency depends on business requirement we maintain.
 Define and activate the non leading ledger: in the non leading ledger, we can have
different fiscal years and posting periods. If you have blank fiscal years and posting
periods, then non leading ledger by default follow leading ledger fiscal year and posting
periods.
 Assign scenarios and custom fields to ledger: Through this configuration, which fields you
want to control, which FI elements you need to update on which ledger.
Scenarios specify which characteristics like profit center, segment, business area, asset
transaction type, trading partner, cost center, functional area to be updated under which
ledger. Normally characteristics like profit center, segment, business areas we wont
update to the non leading ledger. But these fields we update to the leading ledger
depends on the business requirement.
 Define ledger group: Ledger group contains group of ledgers. For each ledger system by
default creates ledger group. That means, one ledger by default represents one ledger
group. In addition to that we can create one our own ledger group to group more than
one ledger under single ledger group.

We need to specify representative ledger, if you assign more than one ledger under single
ledger group. The representative ledger of a ledger group is used to control the following
during posting.
1) Posting period determination

If posting period is open for representative ledger, then postings are made to all other
assigned ledger, even if their posting periods are closed also.

 Define accounting principle:

 Assign accounting principles to ledger groups:
 Define document types for entry view in ledger:

Exchange Rate differences

Exchange rate differences arise in two cases.

Case1: Exchange rate differences araise at the time of posting / clearing transactions. This
is realised exchange rate differences”

Nothing but realised gain / loss on exchange rate differences.

Case2: Exchange rate differences araise at the time revaluation of foreign currency
opening balances:

1) Define Valuation Method: It specifies which method or procedure is used to valuate

foreign currency open items and also to valuate the gl account balance which is
maintain in foreign currency.
 Always evaluate (Generates entries either gain or loss)
 Lowest value principle.( valuate only in case of loss)
 Revalue only (Valuate only In case of gain)
 Post per line item: if you select this each invoice line item wise you can get
for valuation and more documents will be generated. If you not select this,
the entry it will generate summarisation wise.
 Document type: Document type to be used for posting.

2) Define Valuation area: It represents the valuation method. Two purposes we can use
valuation area.
 By using this we can do more valuation methods.
 We can post different gl accounts and post different ledgers (leading and non
leading ledger)
3) Define accounting principle:
4) Assign accounting principle to ledger group:
5) Assign valuation area and accounting principle.
6) Maintain default GL accounts for both foreign currency revaluation and also for
realised exchange rate difference. (OBA1)

KDF and KDB used to map GL accounts.

Inter Company Transactions