Why do we need Legal Entity?

Hi,
I have read some of Oracle manuals and the discussion on the web. However, I still don't get why we need Legal Entity in EBS. What's difference between Organization Unit (actually I read some on the web)? Since we just need Org_ID in the subledger tables for various operational units, why we still bother to create Legal entity? In some web sites, it always mentions it is used for taxation purpose or repoorting. But I can't find any reports which is generated reply on the legal entity.
I am so confuse on this. Can anyone clarify my mind? thanks a lot in advance.
Regards,
Edmond

Hi Edmond,
the purpose and usage of Legal Entity is not as visible as that of Operating units / Inventory Orgs, however it gained its importance due to the way Configuration has been designed. I would say it is more of a configuration compliance than a feature that meets business expectations ...
You can create a Ledger without Legal Entity, which is allowed by the system, whereas you cannot create an Operating unit without having a legal entity in place....
All security features, transaction controls, reporting requirements are extracted at the Operating unit level ..
When will the legal entity be used during the application operation/reporting?
From Reporting perpective, it plays a vital role.... The reporting requirements of any organization is classified as two, one is BUSINESS need another is LEGAL/STATUTORY need. Now the statutory auhtorities would demand information from a company that has a separate legal presence ...the Statutory authorities are not keen on how many operating units we have under one particular establishment ...it is purely the way how we operate internally ... All custom reports or standard reports available at the Operating
unit level gathers information of the respective legal entity as well....So when i plan my Multi org structure or configuration i should design my operating units in such a
fashion, that it must be grouped under appropriate Legal Entities.
Oracle mentioned about that legal entity is used for taxation and financial reporting. How can we do that?
Legal Entity definition and BSV assignments are used by the system internally on various configurations and also at transaction processing stages, which incidentally includes taxation
aspects and financial reporting .... the statement refers to the system design and not a feature available for configuration ...
What is the difference that more than 1 OU are assigned to 1 single legal entity VS only 1 OU is assigned to 1 single legal entity?
The difference in first case is that, (i.e. 1 OU = 1 LE)
Your operating unit data reflects the Complete Legal Entity Data, hence there is no specific report that needs to be designed for legal entity.
The difference in second case is that, (i.e. 1 or more OU = 1 LE)
every operating unit contains partial information of your Legal Entity and not complete, hence in order to know your Legal Entity's performance or statements, you are to define a report which would club data pertaining to all operating units under it...
If a legal entity is assigned to a ledger, what's the difference if balancing segment is assigned to the ledger VS the balancing segment is assigned to the legal entity?
Honestly, there is no difference since you are allowed to create transactions for all of those BSV's values, there is no system restriction or validation happens during data entry ... However there could be a valid justification from system design/architectural perspective which we may not be aware of .. But there are differences like, when you do not have BSV values at LE level, it impacts certain configuration.... etc ....
All of your questions are very valid, i have only given my views/comments, these are not FINAL answers... :)
Regards,
Ivruksha

Similar Messages

  • Double Cost A/c impact of brrow & lent and Intrcompany in same legal entity

    Hello Experts / Dina,
    Could someone please explain me the double cost accounting impact on borrowed and lent process and inter-company accounting in same legal entity scenario?
    Example – Lets say US company X-star running the project on Mobile Apps development in US consulting division (Project Organization) and the resources from marketing division (Expenditure organization) are working on it on developing marketing campaign and decided to share the cost 100%.
    Using Borrow and Lent:-Assume MIS cost is charge of USD 100 on Project Mobile Apps Development. A/c is
    Debit- US Company-Marketing (Expenditure Org)-MIS Cost A/c (Expense A/c)-100 USD.
    Then if you use borrowed and lent accounting method the accounting entries will be generated as
    Debit- cost to US Company –US Consulting (Project Org) – MIS Cost A/c (Expense A/c)-100 USD
    Credit- cost to US Company-Marketing (Expenditure Org)-MIS Cost A/c (Expense A/c)-100 USD.
    In this case cost on Expenditure organization is totally reverse and cost is only charge to provider organization.
    In Inter-company scenario:- But let say if you are trying to implement the same scenario using inter-company accounting.
    Then MIS cost charge of USD 100 on project will derive the same accounting as mentioned above.
    Debit- US Company-Marketing (Expenditure Org)-MIS Cost A/c (Expense A/c)-100 USD.
    Revenue will generate below accounting.
    Credit- US Company-Marketing (Expenditure Org)-MIS Revenue A/c (Revenue A/c)-100 USD.
    And payables intercompany invoice in provider organization will generate below accounting.
    Debit- cost to US Company –US Consulting (Project Org) – MIS Intercompany Cost A/c (Expense A/c)-100 USD.
    Now the question is why in Inter-company scenario (2nd case example ) the cost of expenditure organization is not reverse similar like in borrow and lent scenario? I guess implementation of intercompany scenario results in double costing for same company (within legal entity).
    But this might look properly when you implement inter-company approach across legal entity as company can report separate expense and (internal-external) revenue across company.
    Similarly like inter-company scenario when you use inter project billing, you end up in creating double costing. Am I right?
    Please let me know whether my understanding is correct?
    Your reply on this will be greatly appreciated.
    Thanks
    :-)

    Hi
    Here are my responses along side your questions:
    1.With borrow and lent you cannot only cross charge within the same operating unit but also cross charge across operating unit only within same legal entity. Am I right?
    No. Borrow and Lent works only within the same operating unit. This functionality does not involve supplier and customer invoices, only accounting entries. When you cross operating units you must use the intercompany billing process.
    2.On the below example explained below sec 2.1; this perfectly works fine in scenario where organization within legal entities are agree to share the revenue.
    But what if the organizations agreed to share the cost? In that case it should generates the accounting mentioned below in section 2.2. Am I right.?
    2.1>; (Example provided by you- share revenue)
    Debit org B on "Internally Purchased Cost" account
    Credit org A on "internal Revenue" account
    2.2>;(same Example used by me with diff scenario of sharing the cost)
    Debit org B on "Internally Purchased Cost" account
    Credit org A on "Labor Cost A/c" account
    If so then isn't it nullifying the cost generated by Org A previously.
    2.2.1>;
    Debit Org A on "Labor Cost A/c"
    after generating borrow & lent
    Debit org B on "Internally Purchased Cost" account
    Credit org A on "Labor Cost A/c" account
    Resulting in general ledger module showing the cost on Org B "Internally purchase cost"
    Am I right?
    In my example the credit of the provider organization is on account - Internal revenue. This is not considered as revenue share, since the revenue of org A from its customer agreement is not decreased.
    Internal revenue and internal purchased costs are two accounts that are different from the norma business accounts. When you report in GL for the organization A you will get external revenue of 1000, labor cost of A of 300, and internal purchased cost of 400.  So margin of org A is 1000-300-400 = 300.
    When you report in GL for the organization B you will get internal revenue of 400, labor cost of 370, and org B margin is 400 - 370 = 30.
    When you report in GL for the entire company (summary of bot organizations) you will have - External revenue of 1000, labor cost of 670, and total margin of 330.
    Note the margin of the company is shared by org A -300, and org b - 30.
    To get the report of the total company I did not included the internal trading accounts - the internal purchased cost and the internal revenue.
    In the approach you provided you credited the cost of org B, rather than credit an internal revenue account.  That is also a legitimate approach. However for audit use I could suggest to use a separate account for crediting the costs o org B, and not the same original account of labor A/C.
    3.But lets say now if organization are agreed to share the cost but instead of using borrow and lent, they are agreed to use inter-company functionality then
    accounting entries will result mentioned below.Am I right?
    3.1>;
    Cost - Debit Org A on "Labor Cost A/c" account
    Inter-comp Invoice - Debit Org A on "Inter Receivable A/c" account
    Credit Org A on "Inter-revenue A/c" account
    Payables inter invoice - Debit Org B on "internally purchase a/c" account
    The accounting results of both processes could be the same. The difference is the introducing of AP & AR invoices and the need to run payments on both sides. In any case on org A you always debit an account which means internally purchase, cost purchased from another organization.  On org B you always credit an account that could be named internal revenue or cost reimbursement or cost reduction, etc.
    Now my worries are if both the process agrees on same principle of sharing the cost design for
    same purpose then why results in different accounting by finally creating double costing on Org A and Org B as well. Am I not sure whether my understanding is correct. Please help.
    Also mentioned by you earlier..
    "In GL you may want to offset both the internal trade accounts on a balancing value of cost center. So the internal revenue credit will offset the internally purchased cost debit."
    I am not sure how you can offset the internal revenue and cost account for Org A in GL. (is this done manually??) Could you please explain in detail if possible?
    My note about the need to offset in GL is related to the method of reporting. As explained in the example above, when reporting on the entire company you need to omit the internal trade accounts.  The method I use is to set up additional cost center value in GL which is not related to any real organization. This cost center is used for offset entries.
    I take the balance of internal purchased cost from of organizations and create a journal entry of the same amount but negative for the offset cost center.  The same is done for the balance of internal revenue of all cost center. As a result  the total internal purchased cost and the total of internal revenue at company level (accross all cost centers) is zero.  Now you can report on the entire company without the affect of the internal trade.  Those journal entries may be created automatically by allocation rules set up in GL.
    Dina

  • Balancing Segment Value assignment to Legal Entity using Account Setup Mgr

    Hello,
    This is on r12.06
    By mistake- I did not assign BSV at Legal Entity level, insteady I directly assigned at Ledger level. Now, I am getting following error when running "Accounting Program" standard program
    The subledger journal entry contains lines with balancing segment values that are not assigned to any legal entity.  Unassigned balancing segments cannot be used to balance a subledger journal entry with balancing segments already assigned to a legal entity.  Either update the balancing segment value assignments for the ledger ADP/Claims Solutions Group or update the balancing segment values used on the subledger journal entry Upon research, It was discovered that that the Balancing segment is assigned only at ledger level and it is not assigned at Legal Entity level in account setup manager.
    When I attempted to assign the BSV at LE level, it is not showing the BSV in list of values.
    I even end dated BS at ledger level and tried again but still the concerned BSV is not showing up in LOV at Legal entity level.
    Now I am completely stuck. Any idea what am I missing? Why, the new BSV is not showing up at LE level LOV when attempting to assign BSV at LE level?
    Thank you for reading this post in advance.
    Regards,
    R

    Once a BSV is assigned to the ledger it does not appear in the LOV of BSV-LE assignment field. Pl see if you can delete the BSV from ledger assignment, then only you can re-assign to LE. In my opinion, it allows you to delete the BSV from ledger level if you have not already used it in transactions. In your case, I wonder if it will allow you to delete it. If not, you have to raise SR with Oracle support.
    Thanks
    Tarun

  • Why do I need to use MOLGA?

    I know that this is a very basic question, but I have been asked why do we need to have a new MOLGA for every country; what I know of is:
    1.     Is the standard method of supporting multi-country (Global) HCM.  MOLGA is central to the SAP HCM solution.
    2.     The correct screens are shown in PA30 to maintain the personnel data in the correct formats for social security or equivalent number, form of address, addresses, bank details and so on.
    3.     The correct infotypes can be made available by MOLGA, where there are particular pieces of information required on a country by country basis u2013 therefore reducing the risk of non compliance
    4.     Correct ESS screens are available
    5.     Payroll available by country.  For example the payroll program is run per country using the MOLGA PC00_Mxx_calc, where xx is the country code, therefore for GB it is PC00_M08_calc.
    But apparently this is not a compelling enough reason - can anyone help with more good reasons?

    Hi Marina
    hope you are doing good.
    Globalized firms need Integrated systems with Independent County Legal, Labor, Taxation ,Currency , Language requirements.
    So a Global ERP System will help to achieve this without compromising the local requirements.
    I shared my experience , hope it sound sane.
    Regards
    Rohit.S

  • What is Unknown Legal Entity for Sale Country (Error ID: 30266)

    When I want to buy a app on APP World, I got this "Unknown Legal Entity for Sale Country (Error ID: 30266)"
    I have already added a PayPal account in APP World. What is this? Why this happen?

    The same problem, how to solve it?

  • Can the country code of a legal entity be changed?

    We have a business situation where we need to transfer 100% ownership of a company from one wholly owned sub to a new wholly owned sub in a different country. This wholly owned sub is a large transaction volume and greater than 250,000 item/BOMs. Our question is can we simply change the current Legal Entity's name, address and country to the new company and country? We would create a new entity to handle the wind down and liquidation of the current wholly owned sub. If this is possible, it would save us the work is setting up the new entity, inventory orgs, etc. and the conversion of POs, invoices, items, BOMs, inventory, etc.

    Hi Sandeep and thanks for your quick response.
    Our business problem is that this entity is very high volume pertaining to open purchase orders and invetory transactions. In essense the business stays exactly the same, the only change is that it will move to another country with an ownership change. We want the current R12 ledger, company and inventory orgs to stay the same. If the new entity cannot assume the current structure, we have a huge setup and conversion task to make the change.
    Again thanks for your quick response.

  • Intercompany elimination at legal entity and profit centre level

    All,
    I have a question regarding intercompany elimination. As far as I understand, BPC can only hold one Interco dimension per application. If you want to perform an intercompany elimination for two dimensions which do not roll up into each other, two separate applications are needed. Please see example below to clarify:
    Data is reported the following way:
    Legal entity   Profit Centre   Account    Interco    Value
    The problem is that the profit centre hierarchy does not roll up into the legal entity hierarchy mainly because there are profit centres set up as legal entities. Consequently, the legal entity hierarchy and the profit centre hierarchy are two independent hierarchies.
    The business requirement is to have an intercompany elimination at profit centre and legal entity level at the same time (hence requiring two Intercos at the same time). This is needed as some of the profit centres are set up as legal entities.
    Can someone advise me as to how to resolve this issue? Did anyone come across a similar problem?
    Please let me know if you require any further clarifications.
    Marc

    Hi
    Try to use 2 application for the interco elimination
    for the 1st appls ur entity will be the entity dimension and use intco as intco dimension
    for the 2nd one use the profit center as entity and build a new intco
    As per interco logic this is using the Intco property in the Entity dimension and Entity property in intco dimension
    it is very impossible to do this in one application
    Thanks
    CSD

  • Currency Code of a Legal Entity - R12

    Hi,
    I need to find out the currency code for a Legal Entity in a R12 instance
    Based on what I have read and from e-TRM, I have written the following queries:
    select gsb.currency_code
      from hr_operating_units hou,
           xle_entity_profiles xep,
           gl_ledgers gsb
    where hou.default_legal_context_id = xep.legal_entity_id
       and hou.set_of_books_id = gsb.ledger_id
       and xep.legal_entity_id = 9999;       
    select currency_code
      from gl_ledger_le_v
    where legal_entity_id=9999
       and ledger_category_code='PRIMARY';Which of these two is more accurate or is there some other way in which I can obtain the Legal Entity currency?
    Thanks,
    Sujoy
    Closing this thread as there have been no answers. I went with the second query.

    Hi Sandeep and thanks for your quick response.
    Our business problem is that this entity is very high volume pertaining to open purchase orders and invetory transactions. In essense the business stays exactly the same, the only change is that it will move to another country with an ownership change. We want the current R12 ledger, company and inventory orgs to stay the same. If the new entity cannot assume the current structure, we have a huge setup and conversion task to make the change.
    Again thanks for your quick response.

  • First Party Legal Entity link with Fiscal Classification Type Code- R12

    Hello Team
    We are working on one of the dimension on E- Tax (BI Apps).
    As part of the dimension we need to identify the Legal entity and the linked Fiscal Classification Type Code (Associated Fiscal Classifications) to it. This we are able to see from the application with the following navigation.
    Parties: Party Tax Profiles > Party Tax Profiles > Query with the First Party Legal Entity.
    Now would seek your help from the technical perspective. How is this linkage happens between Legal Entity and Fiscal Classification Type Code (Associated Fiscal Classifications to it)? We have verified few tables and there is no link available.
    If possible provide us the Join Conditions.
    Regards
    Pawan Tallam

    Hello Hansen,
    I found this note on My Support:
    "R12. EBTax. How to Differentiate Tax Rate Code for Payables and Receivables Transactions in Tax Classification Code LOV (List of Values). [ID 756985.1]
    Tax Classification Code LOV ( List of Values) is showing all tax rates created in EBTax. You need to choose your tax rate code in the list of values on tax classification code in Payables or Receivables. How do you differentiate the Tax Rate Code for Payables and Receivables transactions in the Tax Classification Code LOV?
    *Solution*
    Please note that in R12, there is a centralized tax engine. Tax set up made in EBTax will be and can be applicable to both Payables and Receivables. Any tax rate created in EBTax, will be available as a Tax Classification Code LOV in both these applications. It cannot be restricted and it is the intended functionality.
    If Payables and Receivables exist with unique operating units then the MOAC security settings can be used to restrict the LOV. Additionally if EBTax is configured propertly the tax classification codes will not be used for tax determination except in exception based scenarios. Please see the case study in *Note 577996.1* for examples
    I just setup ebTax using tax codes for AR and AR and, by the moment, the tax codes from both modules are shared on the LOV. We used a convention for the code naming...but I'm will be looking note 577996.1
    Regards.

  • Why do we need to create an emergency file?

    Please see the link  http://help.sap.com/saphelp_47x200/helpdata/en/9f/db95e635c111d1829f0000e829fbfe/content.htm
    Why do we need to create an emergency file?

    user10566312 wrote:
    Packages I know are used to group procedures together. But why do we create packages when stored proc alone is sufficient.For the same reason there are units in Pascal. Libraries in C. It allows the encapsulation of functionality as a single entity with a public interface and a private implementation.
    It is is standard as far as structured programming goes.
    And a single stored procedure is far from sufficient. It cannot have private and public static variables for keeping state. It cannot present a comprehensive and flexible call interface to the caller. It does not support polymorphism. It cannot expose constants and user types. Etc.

  • Why do we need to set site owner of a site collection?

    Hi All,
     why
    do we need to set site owner of a site collection?
    Thanks,
    Mohakk

    Hi Mohakk,
    Thanks for posting your issue, Kindly find the required details below
    The System Owner is responsible for the availability, and support and maintenance of a system and for the security of data residing on that system. The system owner is responsible for the availability, and support and maintenance, of a system and for the
    security of the data residing on that system. The system owner is responsible for ensuring that the computerized system is supported and maintained in accordance with applicable SOPs. The system owner also may be the process owner.
    The System Owner acts on behalf of the users. A System Owner may:
    Approval of key documentation as defined by plans and SOPs
    Ensuring that Standard Operating Procedures (SOPs) required for maintenance of the system exist and are followed
    Ensuring adequate training for maintenance and support staff
    Ensuring changes are managed
    Ensuring the availability of information for the system inventory and configuration management
    Providing adequate resources (personnel including SMEs, and financial resources) to support the system
    Reviewing audit reports, responding to findings, and taking appropriate actions to ensure compliance
    Coordinating input from other groups (e.g., finance, information security, safety, legal)
    Also, you can attend online learning course on below mentioned URL
    https://www.microsoft.com/learning/en-us/course.aspx?id=55035a
    I hope this is helpful to you, mark it as Helpful.
    If this works, Please mark it as Answered.
    Regards,
    Dharmendra Singh (MCPD-EA | MCTS)
    Blog : http://sharepoint-community.net/profile/DharmendraSingh

  • Why do we need Segment Reporting?

    Dear Experts,
    Why do we need Segment reporting since Profit Center reporting can do the same?
    Basically what's the difference?
    Regards,
    Abraham

    Hi Abraham,
    This is what IAS -14 AND IFRS -8 says:
    IAS
    Business segment: a component of an entity that (a) provides a single product or service or a group of related products and services and (b) that is subject to risks and returns that are different from those of other business segments. [IAS 14.9]
    IFRS
    that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity)
    So every company which wants to prepare their Financial statements with either IAS or IFRS need to prepare segment wise Balance sheets and P&L accounts also.
    A reportable segment is a business segment which is generating 10% of total revenues and 10% of total profit or loss and which is having 10% of total assets.
    Please get back to me if you need further assistance.
    Regards,
    Ravi.

  • Legal Entity Details in place of Operating Unit Detail in PO_STANDARD_XSLFO

    Hi all,
    I want to replace the Operting Unit name and Address, which is coming on first page of PO output for Communication, by Legal Entity name and Address.
    In the XSLFO template above the Operating unit Details they had given the Legal Entity Name and Address(It is Commented).... What i did, i commented the Operating Unit Details and uncommented the Legal Entity details.....
    but after doing this i am not getting legal Entity details in PO Output.. Its giving Blank on that place.....
    anyone has any idea.. why it is not printing LE details......
    Regards
    Ravi

    Hi Tim,
    I am not adding any extra field from myside.....
    LE fields are present in template..... but they are commented there...
    Operating Unit Fields are also present there.... But they are uncommented.....
    It looks by seeeing the code of Template that we can use LE deatails in place of Operating unit details...
    I just did reverse... Uncommented the LE deatails and Commented the Operating unit details...
    Regards
    Ravi

  • How do I change my company Legal Entity name on ITunes Connect?

    I recently set up my iTunes Connect account in order to sell books.  However, the legal entity name does not match up identical to the one that the IRS has in it's database.  Specipically, the company name is "The Raj Books, L.L.C." - however, the IRS drops the "The and periods" for its database.  So the company name becomes "Raj Books LLC".  Now my name in the iTunes Connect database does not match the IRS so when the tax ID is entered I am told that it does not match the company name.  I need to change my Legal Entity name in ITunes Connect - can anyone tell me how to accomplish this task?  I do not see the option in my account management section.  Thanks in advance for the  help!

    Contact Apple directy.
    Contact [email protected] to investigate signup issues.

  • Legal Entity Name

    I called the IRS to get an EIN (Employer ID Number), which I need to create an iTunes Connect account. I successfully received the EIN, now I have a question while setting up my iTunes Connect account:
    What should I write under Legal Entity Name?
    my first and last name?
    or my company name, which I had to provide to the IRS, although I'm an individual not a company?

    Thanks
    I already tried twice entering my first and last name as legal entity name, and I got twice an email from Apple:
    When reviewing your iBookstore application we had an issue verifying your U.S. Tax ID and legal entity name with the records at the IRS. You can reenter your information here
    Could the problem be that I registered my US Tax ID last wednesday April 11th?

Maybe you are looking for