Multicurrency Intercompany Transactions and Settlements Constants

Typically, companies that work with different base currencies create transactions and balancing entries between their companies. These are called intercompany transactions. If the organization allows transactions between its companies, and those companies have different base currencies, the companies will be out of balance unless you create and post balancing entries. These balancing entries ensure that the net balance for each company equals zero; that is, debits equal credits. You can enter and distribute invoices, vouchers, and journal entries to multiple companies with different base currencies. The post program makes currency adjustments and automatic entries for the intercompany settlements.

For example, assume the organization consists of companies in France, Canada, and the United States with base currencies of the euro (EUR), Canadian dollar (CAD), and U.S. dollar (USD) respectively. You create a USD transaction that is distributed to general ledger accounts in the French company (EUR) and Canadian company (CAD). The journal entry distribution crosses company and currency boundaries and, therefore, balancing entries must be created for the multicurrency intercompany settlements.

To perform intercompany settlements between companies with different base currencies, you must assign a method in the Intercompany Settlements field in the General Accounting Constants program. The methods that are valid for JD Edwards EnterpriseOne Multicurrency Processing are:

2 (detail)
3 (configured hub)
For method 3, you can have companies with different base currencies within the same configured hub, which uses a common currency.

Intercompany settlement methods 1, *, and N are not valid for JD Edwards EnterpriseOne Multicurrency Processing.

Note: Even if a company does not enter intercompany transactions, be aware that JD Edwards EnterpriseOne software was designed to allow multicurrency intercompany transactions and settlements. Regardless of whether you actually enter intercompany transactions, you must select the check box to allow multicurrency intercompany transactions and specify the intercompany settlement method 2 or 3 in the General Accounting Constants program. If you do not enter batches that contain transactions between companies, the system does not create intercompany transactions and settlements.

The intercompany settlement method that you specify in the General Accounting Constants program must be compatible with the offset method specified in the Accounts Receivable Constants and Accounts Payable Constants programs. If the methods are not compatible, the system issues an error message when you post transactions to the general ledger.

The AR receipts and AP payment programs do not support multicurrency intercompany settlements. If you enter a multicurrency intercompany receipt or payment, the system issues an error message. You cannot post the entry.

The post program uses the offset method to determine whether to create an offset entry for each detail record by batch, transaction, or pay item. For JD Edwards EnterpriseOne Multicurrency Processing, you cannot use the batch offset method (B) because the post programs cannot post batches of invoices, vouchers, receipts, and payments that contain one or more foreign or alternate currencies.

This table shows the intercompany settlement methods and their compatibility with the Accounts Receivable and Accounts Payable offset methods:

Intercompany Settlement Methods for Multicurrency	Offset Method B (one offset per batch)	Offset Method Y (one offset per transaction)	Offset Method S (one offset per pay item)
2 - detail	Incompatible	Compatible	Compatible
3 - configured hub	Incompatible	Compatible	Compatible

Note: If you use detailed currency restatement, you must specify offset method Y.

See Setting Up Detailed Currency Restatement.