LC Payments and Letter of Guarantee

Dear Consultants,
a)Can anyone please tell me the workaround about how to handle Letter of credit payments in AP by maintaining details like LC no., LC amount, LC due date etc., and the accounting impact for the same.
b)Is there is any workaround in AR or through
other modules for maintaining guarantee details issued to outside parties?
Expecting an early feed back.
Thanks and Regards
Priya

Hi,
1.There is no special feature in AP for handling of LC. LC payments can be treated the same way like post dated payments. Any additional information can, however, be captured in attachments/DFF.
2.It is possible to use AR for accounting of the guarantees given by us to the suppliers (or customers)
Normally the guarantees issued are not accounted in books. In India, they are only shown as contingent liabilities. But, as Oracle Apps generates acounting entries for guarantees also, we can nullify its effect
by assigning asset/liability accounts to both the 'receivable account' and the 'revenue account'when we define transaction types.
We can have separate accounts mapped to guarantees received and guarantees issued.
To cancel/reverse guarantees issued on its expiry...
a. Define a receivable activity of type adjustment
for eg 'Guarantee expiry'
b. Attach the account that has been assigned to 'revenue account' in the transaction type
to 'GL account' in receivable activity.
c. When the guarantee expires, nullify it by doing an adjustment in the transactions window (by choosing 'Guarantee expiry' receivable activity).
Alternatively, you can nullify a guarantee by raising a credit memo against it.
Note: It is not possible to adjust guarantees issued against purchase invoices as in the case of guarantees received.
Bye
R Elango
null

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