White Paper Oracle Subledger Accounting

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ORACLE SUBLEDGER ACCOUNTING
Concepts and Exercises
Author: Sandeep Vantmuriswami

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CONFIDENTIALITY STATEMENT
This publication has been prepared for general guidance on matters of interest only, and does not
constitute professional advice. You should not act upon the information contained in this publication
without obtaining specific professional advice. No representation or warranty (express or implied) is
given as to the accuracy or completeness of the information contained in this publication, and, to the
extent permitted by law. I do not accept or assume any liability, responsibility or duty of care for any
consequences of you or anyone else acting, or refraining to act, in reliance on the information contained
in this publication or for any decision based on it.
All rights reserved.
Change History
Version Date Changes Author
0.1 31-Mar-2015 Final Version Sandeep
Vantmuriswami

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Table of Contents
1 OVERVIEW ..................................................................................................................................................5
2 TARGET AUDIENCE......................................................................................................................................5
3 PRE-REQUISITES.........................................................................................................................................6
4 SCOPE........................................................................................................................................................9
4.1 STRUCTURAL DIFFERENCE BETWEEN 11I AND R12 ....................................................................................9
4.2 APPLICATIONS USING SLA ..................................................................................................................... 10
4.3 TRANSACTION FLOW.............................................................................................................................. 11
4.4 SUB LEDGER ACCOUNTING COMPONENTS .......................................................................................... 12
4.4.1 Ledgers ....................................................................................................................................... 13
4.4.2 Sub ledger Accounting ............................................................................................................... 13
4.4.3 Application Accounting Definitions (AAD)................................................................................ 14
4.4.4 Journal Line Definition (JLD) ................................................................................................... 14
4.4.5 Supporting References............................................................................................................... 16
4.4.6 Business Flow............................................................................................................................. 16
5 BRIEF BACKGROUND ON THE CLIENT REQUIREMENT .................................................................................. 18
5.01 Summarized Business Requirements.......................................................................................... 18
5.01 Detailed Business Requirements ................................................................................................. 18
5.1 Scenario#1 Header Description .................................................................................................... 20
5.1.1 Deriving desired Journal Header Description ..........................................................................................20
5.1.2 Actual Test Result > Deriving Journal Header Description .....................................................................24
5.2 Scenario#2 – Use of Mapping Set and Account Derivation Rule................................................. 25
5.2.1 AP Liability (natural Account only) account based on Supplier ...............................................................25
5.2.2 Actual Test Result > AP Liability (natural Account only) account based on Supplier ..............................30
5.3 Scenario#3 Account Derivation using Constant and Condition .................................................. 32
5.3.1 AP Distribution Account reclassification basis line amount.....................................................................32
5.3.2 Actual Test Result > AP Distribution Account reclassification basis line amount....................................34
5.4 Scenario#4 Multi Period Accounting............................................................................................ 35
5.4.1 Use of Multi period accounting for Insurance Expense paid in advance. This prepaid expense is later on
expensed over a period of time.........................................................................................................................35
5.4.1.1 Accounting Entries............................................................................................................................35
5.4.1.2 Journal Line Types............................................................................................................................35
5.4.1.3 Proration types for deriving Recognition Amounts...........................................................................36
5.4.1.3.1 First Period.....................................................................................................................................37
5.4.1.3.2 Days in Period................................................................................................................................37
5.4.1.4 360 days............................................................................................................................................37
5.4.1.5 Totals Days in Period ........................................................................................................................38
5.4.2 Multi Period Set ups................................................................................................................................39
5.4.2.1 Invoice Line DFF ..............................................................................................................................39
5.4.2.2 Account Derivation Rule...................................................................................................................40
5.4.2.3 Journal Line Type.............................................................................................................................42
5.4.2.3 Associate MPA Line Types with Custom JLD ...................................................................................45
5.4.3 Actual Test Result > MPA........................................................................................................................47
5.4.3.1 Proration Type > 360 Days ...............................................................................................................48
5.4.3.2 Proration Type > Total Days in period..............................................................................................49
5.4.3.3 Proration Type > First period ...........................................................................................................49
5.5 Scenario#5 Detail Journal Line Description ................................................................................ 51
5.5.1 Use Journal Line Type for deriving detailed Journal Line Description ....................................................51
5.5.2 Journal Line type set up for detailed description.....................................................................................51
5.5.3 Actual Test Result > Detailed Journal Line Description ..........................................................................53
5.6 Fixed Assets and SLA .................................................................................................................... 54
5.6.1 Account Generator v/s SLA and upgrade consideration ..........................................................................54
5.7 Scenario#1 Account Derivation Rule using existing Rule............................................................. 55
5.7.1 Cost center to default from Expense account assignment for additions ...................................................55
5.7.2 Actual Test Result > Cost center to default from Expense account assignment .......................................58
5.8 Scenario#2 Supporting Reference................................................................................................ 59
5.8.1 Supporting References set up for Asset Category Flex field segment 1.....................................................59
5.8.2 Actual Test Result > Supporting Reference .............................................................................................60

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6.1 Key Profile Options........................................................................................................................ 63
6.2 Sub ledger Accounting Reports .................................................................................................... 64
6.3 Points to be noted.......................................................................................................................... 65
6.3.1 Fresh set up or upgrade from 11.5 to R12 .................................................................................................65
6.3.2 Modification and Validation of AAD .......................................................................................................66
6.3.3 SLA Pre Upgrade Program ......................................................................................................................66
6.3.4 SLA Patching...........................................................................................................................................67
6.3.5 SLA Tables...............................................................................................................................................68
7 REFERENCES ......................................................................................................................................... 69
8 APPENDIX .............................................................................................................................................. 69

Internal Use Page 5 of 69
1 Overview
This article aims to provide a comprehensive knowledge and understanding of the Sub ledger
accounting (SLA) in Oracle E-Business Suite (EBS) R12. It uncovers some of implementation tips
and techniques and also shows how users can meet their financial and reporting needs using SLA.
The article highlights how to use SLA functionality to automate and control various scenarios
using specific business rules.
With the introduction of Oracle EBS R12, accounting-related functions and structures change
significantly from previous releases. Many of the original design limitations, such as the inability
to journal easily across ledgers (sets of books) as well as the existence of complex setups, the use
of global shared service centers, separate business tax sub-systems, and separate customer and
supplier masters have been resolved.
SLA is a new functionality introduced in EBS R12. SLA is a powerful and flexible rules-based
accounting engine that generates accounting entries based on source transactions for all Oracle
Applications transactions. SLA helps to do a single step posting to all ledgers and also provides
real-time/online accounting information as well as an audit trail for all transactions.
Here are some more facts about SLA
• SLA works with Oracle General Ledger (GL) to provide an accounting system tailored to your
requirements. Detailed accounting is for transactions in sub ledger with drilldown
• SLA supports user-defined accounting rules.
• SLA allows multiple accounting representations for a single transaction
• SLA establishes a common data model and interface for all sub ledgers.
• SLA is not a module or application or product but a service within a product.
• There is no separate responsibility available for SLA. In order to get to the Sub ledger accounting
rules, you will have to use the module specific responsibility and then get to accounting setup to
define the Sub ledger accounting rules.
2 Target Audience
This document is targeted for Oracle E-Business Suite Functional Consultants

3 Pre-Requisites
Functional consultants should have basic understanding of Accounting, Business processes and
Sub ledgers.
Pre requisite steps before anyone start modifying SLA – Prepare user owned SLAM by copying
standard one and select only modules that are application for your business
Step 2 > get your own Application accounting Definitions created and associate them to SLAM –
“S1_ACC”
Note: While performing step 2 above you will have to log in to individual responsibilities specific
to modules and create a copy. For setting up AAD for Assets you should be in Assets
responsibility. Query SLAM > S1_ACC > Select Application Assets and Click Application
Accounting Definitions > Click Copy and enter the Custom AAD name as below and hit Done

After creating user required AAD, you would need to associate with SLAM “S1_ACC” see below
screen shot.

Similarly create it for other AAD and associate to SLAM (created one for AP – “S1_AP”)
Associate SLAM= “S1_ACC” to your ledger > Click Update
Ensure that customized SLAM defined by you is appropriately linked with Ledger

4 Scope
This document provides an insight how to best utilize Sub Ledger Accounting to meet the needs
of financial accounting and reporting.
Note: Document doesn’t capture the initial Key Setups nor the Operational functionalities within
sub ledgers
4.1 Structural Difference between 11i and R12
The Accounting Structure in EBS R12 is quite different than in EBusiness Suite 11i. In EBS 11i,
when you process a transaction to GL, it posts directly to General Ledger as Journal Entries. In
EBS R12, when a transaction is processed, it creates sub ledger journal entries before it hits
the General Ledger. (See Figure 1) EBS R12 Users also now have options to determine if they
want to do a draft accounting or final accounting or create a final accounting post to GL.
Figure 1
11i
Assets
Cash
Management
Payables Projects Receivables
General Ledger
Set of Books
Figure 2
R12
Assets
Cash
Management
Payables Projects Receivables
XLA
General Ledger
Primary and Secondary
SLA controls that the GL balances and SLA balances tie together and that both tie to the document
sources for e.g. AR Invoices, AP payments etc.

Structural difference between 11i and R12
11i R12
Sub ledger accounting entries directly
interfaced to GL
Sub ledger Entries pass through SLA before
being interfaced to GL
No intermediary exist between sub ledger and
GL
SLA acts as an intermediary common
accounting platform
Account Generators within Sub ledgers are
used to derive accounting code combinations
SLA provides a robust accounting engine with
multiple options to derive desired code
combinations
Technical assistance is required in order to
customize Account Generators
Functional consultant can tweak the Account
Derivation Rules without technical assistance
DFFs required to capture additional data to
interface to GL from Sub ledger
SLA provides supporting references to hold
additional data and interface to GL
Modifying account generator is time
consuming
Modifying SLA is easier and faster
4.2 Applications using SLA
Assets Public Sector
Cash Management Federal Financials
Payables Payroll
Projects Property Manager
Receivables Loans
Costing Lease Management
Process Manufacturing Intercompany

4.3 Transaction Flow
Usual Transaction flow starts from each of the individual modules – Assets, payables, receivables,
fixed assets, projects etc. Upon running create accounting information will flow to XLA tables in
the form of SLA journals (XLA headers, lines). Journal import pushes these valid SLA journal
entries to GL JE Batches, Headers and lines. Post the GL journals to update GL balances which
should be in sync with XLA balances
Here is how the transaction flows all the way to GL through SLA module.
Figure 2

4.4 Sub ledger Accounting Components

4.4.1 Ledgers
There are Primary, Secondary and reporting Ledgers (Set of books in 11i). Legal Entities are
associated with Primary ledgers and Primary ledger typically reflects transactional accounting.
Secondary ledgers can be utilized for statutory, management, and/or consolidation reporting.
Mapping from Primary to Secondary Ledger(s) is defined in General Ledger and is assigned in the
Accounting Setup Manager. Reporting ledger is mainly used for reporting financials in foreign
currency where rest of 3C’s remain the same.
4.4.2 Sub ledger Accounting
Following are seeded sub ledger accounting methods:
• Accrual with Encumbrance accounting • Cash with Encumbrance Accounting.
• Standard Accrual • Standard Cash • US Federal Accounting.
Accrual and/or Cash with Encumbrance accounting is more commonly used by Public Sector
Enterprises. Federal Customers use the US Federal Accounting method. Standard Accrual and
Cash is used by Non Public Sector enterprises.

4.4.3 Application Accounting Definitions (AAD)
Application Accounting Definition (AAD) comprises Event Classes and Event Types. Event Classes
define the transaction types for accounting rule e.g., Adjustments, Bills Receivable, Receipts and
Transactions etc. Event Types define possible actions for each transaction type with accounting
significance e.g., Receipt Created, Receipt Reversed, Receipt Unapplied etc. Navigation: Set UP>
GL/AR/AP/FA> Sub ledger Accounting > Accounting Methods Builder > Methods and
Definitions > Application Accounting Definition
4
4.4.4 Journal Line Definition (JLD)
Journal Line Definitions is crux of the Sub ledger Accounting Engine. This has Journal Line
Types, Account Derivation Rules and Journal Entry Description.
The Account Derivation Rule is where you define how you want the account code combination you
would like to derive. Line type is the Journal Line type. Journal Entry descriptions are what you
provide as your own descriptions for the journals.

Set up Screen
SLA Journals
Account Derivation Rule Journal Line Type Journal Description

4.4.5 Supporting References
This constitutes the optional information that you can configure. For example, Supporting
References can be configured to capture additional information.
Supporting Reference
Supporting reference can also be used to track balances for attributes in combination with
Ledger, Period. Usually track balance is enabled for attributes not available in standard
reports. Balances carryforward option is also available.
4.4.6 Business Flow
Use business flows to establish a link between the accounting of transactions that are related both
within the same application and across applications. With this link, you can preserve key
accounting information across related transactions instead of using the same set of rules to derive
this information.
The purpose of business flows is:
1) Preserve General Ledger accounts or segment values across journal entries of related
transactions within a business flow
2) Ensure proper General Ledger balances
A business flow is a series of logically related business transactions and their accounting where the
creation of one transaction causes the creation of another transaction which itself can result in
another transaction. For example, when goods are received, an invoice is entered and the invoice
is paid. The business flow at the transaction level is:
a) The receiving transaction is entered to acknowledge the arrival of the goods.
b) The invoice is entered to acknowledge that the supplier is owed for the goods and therefore
references the receipt transaction.
c) The payment is created to satisfy the amount owed on the invoice and therefore references
the invoice.
The business flow at the accounting level is:
a) The receipt generates an entry to the purchase order charge account.
b) This entry is offset by an accrual entry representing a future invoice liability.

c) The invoice reverses this accrual entry and creates the invoice liability, and the accounting
for the payment reverses the invoice liability and generates the entry reducing the
company's cash account.
Business Flow Example –
In the context of business flows, upstream refers to a transaction and its accounting that occurred
before the current transaction. Downstream refers to a transaction and its accounting that come
after the current transaction. For example, an invoice is upstream from the payment and a
payment is downstream from the invoice.
In a business flow, it may be unreliable to copy the General Ledger account entered on an
upstream transaction to the current journal entry. This is because the AMB provides the flexibility
to override certain Accounting Flex field values such that the General Ledger account on the
transaction is different from the General Ledger account on its journal entry. The accounting side
of a business flow is not preserved if the downstream journal entry copies the General Ledger
account from the upstream transaction, which was actually accounted to a different General
Ledger account.

5 Brief Background on the Client Requirement
5.01 Summarized Business Requirements
Sr.
No.
Business Requirement
1 Modify Journal description per business needs
2 Tax Authority liability to be tracked separately at source in Payables and in GL
3 Payables Employee expenses above $1000 should be recognized as fund
4 Prepaid expense to be recognized over a period of time in future
5 Bring in Payables Invoice distribution description into GL
6 Asset Addition entries should be brought in to GL along with cost center detail
7 Bring in Additional information Like Category from Assets into GL and Track balances
(additions) for specific attribute (Category)
5.01 Detailed Business Requirements
This section will provide you ample business requirements and relevant solution devised to meet
them. Objective is to touch upon each unique requirement and ways to handle it through SLA.
Requirement 1 – Business wants invoice description to be generated and pushed to GL per
below:
a) Invoice Num#,Voucher Num#, Invoice Date, Supplier Num#, Paid Status, Invoice Description
Condition = if Voucher number exists
And/Or
b) Invoice Num#, Invoice Date, Supplier Num#, Paid Status, Invoice Description
Condition = if voucher number does not exist
Requirement 2 – Business would want to generate a separate liability account for Tax Authority
invoices. Which means if an invoice is created for vendor type = “Tax Authority” the trade liability
from Financial Options should not be picked. Instead, it should be pick the Liability account
reserved for Tax Authority Suppliers (2211)
Requirement 3 – Client wants to reclassify the AP invoice distribution Employee Expense
Account to Employee Expense Fund account if the amount expensed on invoice is greater than
USD 1000. Employee Expense Account is expense type account whereas employee expense fund
account is Asset Account, which will be used to be expense over a period of time in near future.
Requirement 4 - Client would want to recognize prepaid expense over a period of time for
which is paid up front. For example – Client pays insurance premium for 4 months in Advance

in July for time period from 15 August to 15 December. Client wants to defer the expense for next
four months starting 15th August.
Requirement 5 - There exists a business requirement wherein detailed AP Invoice
line/Distribution description should be interfaced to GL in detail. By default each journal line
carried following description “Journal Import Created”. Business wants to actually see what is
entered in AP invoice distribution description in detail.
Requirement 6 - Oracle Assets does not generate code combinations with cost center details
for all entries except Depreciation. However, client wants to report on additions and retirement
by cost center and would want to have balances generated in GL as well. Usually cost centers are
associated with each fixed asset expense assignment.
Requirement 7 – Business would need to bring in additional information like Asset Category
Flex field Segment 1 and also maintain balances for it for reporting purposes.

5.1 Scenario#1 Header Description
5.1.1 Deriving desired Journal Header Description
To have journal description for an Payables invoice in below format
Invoice Num#,Voucher Num#, Invoice Date, Supplier Num#, Paid Status, Invoice Description
Condition = if Voucher number exists
Invoice Num#, Invoice Date, Supplier Num#, Paid Status, Invoice Description
Condition = if voucher number does not exist
Step 1
Query AAD for payables > Click on Header Description > Click on Journal Entry Description

Click on Journal Entry Descriptions

Click Copy to set up new rule for invoice description
Enter Journal Description code and description
Click on Condition to enter the first condition (If voucher number exists) and save

Click on Details and enter the sequence in which you would like to display the components of description –
(Invoice Num#,Voucher Num#, Invoice Date, Supplier Num#, Invoice Description)
Similarly enter the details for 2nd condition – (Invoice Num#, Invoice Date, Supplier Num# and Invoice
Description)

5.1.2 Actual Test Result > Deriving Journal Header Description
Invoice # s2_head_desc Invoice Date#12-AUG-2015 Supplier#5092 and Description is blank
Since there is no voucher number generated for below invoice, following description will be generated =
“s2_head_desc 12-AUG-2015 5092”
Sub ledger journal with description

5.2 Scenario#2 – Use of Mapping Set and Account Derivation Rule
5.2.1 AP Liability (natural Account only) account based on Supplier
Client would like to have specific natural account to be tagged as Liability for a Withholding tax
authority
Account 2211 (Tax Authority liability) should be credited for Tax Authority invoice.
Step 1: Create mapping set to assign Liability account values for Tax Authority type Supplier
Navigation: Setup > Accounting Setup > Sub ledger Accounting Setup > Accounting Methods
Builder > Journal Entry Setups > Mapping Sets
Enter Set code and name along with Description
Choose Input Lookup Application as “Purchasing” and lookup type as “Valid Supplier Type”
Output Accounting COA should be Ledger COA and Type as Segment (Account)
Enter the input value in Mapping set values section as Tax Authority and Output Value as 2211
>save

Step 2: Create new ADR for Liability Journal Line type
Create new Journal Line Definition – SLAM > AAD > JLD
Click ADR and create new ADR by copying existing one

Step 3: Click Copy and enter rule code, name and description. Provide accounting flex field and
click done

Step 4: Select value type as Mapping Set. Value cannot be entered until you create a mapping set. Input
source should be supplier type for to pull up values for supplier types for mapping set > input value
Step 5: mapping > if Supplier type=”Tax Authority” liability account should be 2211

Step 6: Enter Conditions for if supplier type tax authority
Step 7: You would also need to ensure that if Supplier type is not Tax Authority then default to
invoice distribution account.

Step 8: Now Associate Journal Line Definition to AAD set up by user
5.2.2 Actual Test Result > AP Liability (natural Account only) account based on Supplier
Vendor Type is “Tax Authority” for supplier #8032

Liability account # 2210 set up at Supplier and site
Invoice # “s5_tax_authority”created for Tax Authority mentioned above
Sub ledger Accounting Entry for Liability – “2211” gets picked up as vendor type is “Tax
Authority”

5.3 Scenario#3 Account Derivation using Constant and Condition
5.3.1 AP Distribution Account reclassification basis line amount
All expenses coded to account#6100 (Employee expenses) over and above $1000, should be
treated as an asset and coded to asset account # 1101 (Employee Exp Fund), which will be
expenses out over a period of time.
Step 1: Create new Account Derivation Rule
Navigation: Setup > Accounting Setup > Sub ledger Accounting Setup > Accounting Methods
Builder > Journal Entry Setups > Enter Rule Code, Name and description. Choose COA and
output type segment as Account
Enter priority 1 with Value type Constant with Value as 1101
Click on Condition to Enter condition if invoice distribution amount greater than 1000

Step 2: Select JLD for Invoices and select Event class as Item Expense
All segments from Invoice Distribution and Account segment from ADR-“S1_AP_DIST” > Click
Save
If condition for Distribution Amount > 1000 fails then automatically all segments will be picked
from Invoice Distribution Account.

5.3.2 Actual Test Result > AP Distribution Account reclassification basis line amount
Entered two invoice lines #1 with amount – 1000 and line # 2 with 1010
Invoice line with amount > 1000 got coded to 1101 whereas the other line with amount <= 1000 got coded
to original charge account from invoice distribution.

5.4 Scenario#4 Multi Period Accounting
5.4.1 Use of Multi period accounting for Insurance Expense paid in advance. This prepaid
expense is later on expensed over a period of time.
Multi Period Accounting enables users to create accounting for a single accounting event for more
than one GL period. The functionality is primarily used to recognize revenue or a prepaid expense
or revenue across multiple GL periods
Company pays for insurance premium of INR 3000 on 31st July, 2015 and wants to recognize it
from 15th Aug for next four months.
5.4.1.1 Accounting Entries
Original Prepaid Insurance Premium –
Prepaid Expense Dr. 3000
To Liability Cr. 3000
Recognition of Expense
For each of the Subsequent Months for four months –
Aug-2015 Insurance Expense Dr. 750
To Prepaid Cr. 750
Sep-2015 Insurance Expense Dr. 750
To Prepaid Cr. 750
Oct-2015 Insurance Expense Dr. 750
To Prepaid Cr. 750
Nov-2015 Insurance Expense Dr. 750
To Prepaid Cr. 750
5.4.1.2 Journal Line Types
Two important concepts that needs attention are Accrual and Recognition. Two Journal Line
Types – one for accrual (original prepaid expense) and other for Recognition (Recognition of
expense in each of subsequent months.
Please refer screen shot below –
Journal Line Type has options for multi period which helps oracle understand which line type is
mean for recording Accrual Entry (Prepaid Expense) and which one for Recognition

5.4.1.3 Proration types for deriving Recognition Amounts
There are 4 seeded Proration Types for calculating recognition amounts –
1) First Period
2) Days in Period
3) 360 days
4) Total Days in Period

5.4.1.3.1 First Period
This method will consider the prepaid expense amount divided by number of months this expense
should be recognized in.
Recognition Amount = Total Accrual Amount / Total number of recognition months
= 3000/4
= 750 INR per month for four months
5.4.1.3.2 Days in Period
Ratio © for actual days (b)/Total Days (a) in a month is calculated and summed. Total Accrual
amount is divided by sum of ratios to arrive at proportional amount (d). Prorated amount is then
calculated by c*d. For the last month in this case Dec – Prorated Amount = 3000 - Sum of
Prorated amount (Aug+Sep+Oct+Nov)
Days in Period
Month Total Days in Month (a) Actual Days in month (b) c=b/a Prorated AMT = c * d
AUG 31 17 0.5484 401.9814
SEP 30 30 1.0000 744.4168734
OCT 31 31 1.0000 744.4168734
Nov 30 30 1.0000 744.4168734
Dec 31 15 0.4839 364.7679797
153 123 4.0323 0
Proportionate Amount (d) 3000/4.0323 = 744.4169
5.4.1.4 360 days
Ratio © for actual days (b)/Total Days (a) in a month is calculated and summed.
It is considered that there will be 30 days in month as such column (a) will have 30 days each
month. Total Accrual amount is divided by sum of ratios to arrive at proportional amount (d).
Prorated amount is then calculated by c*d. For the last month in this case Dec – Prorated Amount
= 3000 - Sum of Prorated amount (Aug+Sep+Oct+Nov)
360 Days
Month Total Days in Month (a) Actual Days in month (b) c=b/a Prorated AMT= c * d
AUG 30 17 0.566666667 418.0327869
SEP 30 30 1 737.704918
OCT 30 30 1 737.704918
Nov 30 30 1 737.704918
Dec 30 15 0.5 368.852459
150 122 4.066666667
Proportionate Amount (d) 3000/4.066666667 = 737.7049

5.4.1.5 Totals Days in Period
Actuals days is month are summed for all recognition periods (Aug till Dec) = 123. Later, Original Accrual
Amount is divided by actual days (123) and Proportionate Amount (d) is derived. Prorated amount is
calculated by multiplying (d) by (b)
For the last month in this case Dec – Prorated Amount = 3000 - Sum of Prorated amount
(Aug+Sep+Oct+Nov)
Total Days in Period
Month Total Days in Month (a) Actual Days in month (b) Prorated AMT= b * d
AUG 31 17 414.6341463
SEP 30 30 731.7073171
OCT 31 31 756.097561
Nov 30 30 731.7073171
Dec 31 15 365.8536585
153 123
Accrual Amount 3000.0000
Actual Days in Month 123
Proportionate Amount (d) 3000/123= 24.3902439

5.4.2 Multi Period Set ups
5.4.2.1 Invoice Line DFF
It is required to set up a DFF with help of which we can recognize if invoice line is meant for
Insurance or not. If yes, then use Multi Period Accounting logic
Click segments

Click Value Set
Query the Values – defined value for Insurance as “INSUR”
5.4.2.2 Account Derivation Rule
To meet the requirement of generating account codes (for Recognition line type) based on the kind of
insurance line, we need to define a rule to derive the Account.
Navigation: Payables Responsibility->Setup->Accounting Setup->Sub ledger Accounting Setup-
>Accounting Methods Builder->Journal Entry Setup->Account Derivation Rule
Define ADR “S1_MPA_RECOG_ADR”

MPA Account Derivation rule “S1_MPA_RECOG_ADR”
Click on “Mapping Set” button to define the Mapping Set “S1_MPA_RECOG_MAP_SET”. Once
the mapping set is defined attach the same to the ADR.Input source: Invoice Line Flex field
Segment4. This means based on the value for Invoice line flex field in the transaction, the
mapping set will derive the value for the “Account” segment

5.4.2.3 Journal Line Type
As discussed earlier there are 2 types of Journal Line Types which are required in case of MPA:
1) Accrual Journal Line Type: This is the journal line type which is debited at first and then gets
Credited in each subsequent period. In other words this is the JLT to store prepaid expenses.
2) Recognition Journal Line Type: This is the actual expense account which gets debited in each
Period of recognition.
Accrual Journal Line Type – Query for Seeded JLT and copy
Application: Payables
Event Class: Invoices
Line Type Code: AP_ITEM_EXPENSE_INV

Check the Accrual Checkbox for Accrual line type

Recognition Journal Line Type – Query for Seeded JLT and copy
Application: Payables
Event Class: Invoices
Line Type Code: AP_ITEM_EXPENSE_INV
After copy, delete all conditions and check the check box for Recognition

5.4.2.3 Associate MPA Line Types with Custom JLD
Add Accrual Line Type “S1_AP__MPA_ACC” to JLD
Derive all segments from Invoice distribution Account and click on Multi Period Accounting
Button
Add Header Description for Journal
Enter Journal Per Period – “One Per Period”
GL Date – First Day of GL Period
Proration Type – Total Days in Period

Click Line Assignments
For Accrual Line Type the Account will get picked from Invoice distribution (prepaid)

Add Recognition Line type on second row and Account Derivation Rule already set up for
recognition. Which would fetch the Invoice Line Flex field Segment 4 – Value as “INSUR” and
only then refer to the Proration Type and generate recognition accounting events.
5.4.3 Actual Test Result > MPA
Created invoice with GL date 31-JUL-2015 entered prepaid expense account as charge account.
At invoice line you have to check the deferred option and enter details for deferring recognition of
expense – Start Date, Number of Period and deferred Period Type.

In order to recognize if this line should be picked for Multi period accounting, you would need to
enter DFF value on invoice line level as “INSUR”
Original Accounting entry create after running create accounting
Upon Create Accounting – you will see that one original Entry for accrual along with each
subsequent recognition entry will be generated in SLA
Original Accrual Entry
5.4.3.1 Proration Type > 360 Days
Accounting Entries for Aug and Sep, 2015 compared. For validation of prorated amounts refer to
calculation chart n set up steps for each proration type

5.4.3.2 Proration Type > Total Days in period
5.4.3.3 Proration Type > First period
To Post Entries you in each of the subsequent period the Period has to be in status “Open” or
“Future Enterable”. You would need to run a concurrent job every month to recognize deferred
expense in each month. This program “Complete Multi period Accounting” will post entries to GL
for each of subsequent period.

If you realize that period is not open the Status of Sub ledger journal entry to change from
Incomplete to Invalid.

5.5 Scenario#5 Detail Journal Line Description
5.5.1 Use Journal Line Type for deriving detailed Journal Line Description
Standard Journal Line Type usually carries Journal Line description as “Journal Import Created”
when a journal is interfaced to General Ledger. Refer screen shot below
If you need detailed Payables invoice line description to be carried to General Ledger, you can set
up Journal Line Type accordingly.
5.5.2 Journal Line type set up for detailed description
Query Journal Line Type “Item Expense” and copy it. Notice the Transfer to GL option is set up as
Summary (that means detailed line description will not be interfaced to GL)

Copy it with Name “S1_IT_EXP_DETAIL_DESC2” and click done.
Change Transfer to GL as “Detail” and save

Associate Journal Line Type with Journal Line Definition
Validate Application Accounting Definition
5.5.3 Actual Test Result > Detailed Journal Line Description
Line3 below pertains to above invoice and description is correctly printed in Journal Line. Since
we did not change the line type for Liability Line Type it came in as Journal Import Created

5.6 Fixed Assets and SLA
5.6.1 Account Generator v/s SLA and upgrade consideration
In Release 12 you still have an option of using conventional workflow account generator or SLA. A
profile option “FA: Use Workflow Account Generation” if set as Yes will allow you to use Account
Generator and SLA will not override account code combinations generated. However if you decide
to use SLA, you would need to set this profile options as “NO” and customize SLA in order to meet
your requirements.
SLA would be a better option over convention account generator with regard to easy set up and
modification of SLA rules (No technical assistance required).
It is also important to consider this Profile option while you upgrade from 11i to R12. Ensure that
this profile option is set appropriately before you starting using upgraded instance.

5.7 Scenario#1 Account Derivation Rule using existing Rule
5.7.1 Cost center to default from Expense account assignment for additions
Step 1: Create new Journal Line Definition for Additions even class. Query standard one and click
Copy

Step 2: Associate new Journal Line Definition with Custom Assets Application Accounting
Definition “S1_FA”

Step 3: In Account Derivation rules add new rule and select Department Segment
Later select Rule Name “Assets Expense Account Cost Center Segment” and Save
Similarly, add it for cost clearing as well

5.7.2 Actual Test Result > Cost center to default from Expense account assignment
Asset added with cost center “740”
Ran create accounting and posted journal in General Ledger
Please refer to journal entry wherein Cost Center is embedded in Account Code Combination

5.8 Scenario#2 Supporting Reference
5.8.1 Supporting References set up for Asset Category Flex field segment 1
Navigation: Setup > Financials > Sub ledger Accounting > Accounting Methods Builder > Journal
Entry Setup > Supporting References
Enter Name and Description. Check Enabled and Maintain Balances check box
You can maintain balances based on type of account. If it is balance sheet account, balance will be
carried forward and if it is P&L account, it will be reduced to Zero at end of the year. You also have
an option of always carryforward balances irrespective of type of account.
Associate it to Appropriate Journal Line Type > Line Assignment- “Addition Cost”

5.8.2 Actual Test Result > Supporting Reference
Enter new asset # 118974

Journal Entry for additions > Click on Line Drilldown
Click on Supporting Reference
Supporting Reference “Category Flex Field Segment 1” reflected below (‘Computer”)

In Order to Check the Balance you would need to run SQL script to retrieve data from Sub ledger
Tables
Table Name > XLA_AC_BALANCES
select * from apps.xla_ac_balances
where analytical_criterion_code='T1_FA'
and period_name='Jun-10'
and period_Balance_dr='1000';
Screen shot below from TOAD

6.1 Key Profile Options
SLA: Enable Sub ledger Transaction Security in GL
Use this profile option to combine sub ledger transactions security with data access security for
General Ledger responsibilities when drilling down to multi-organization enabled sub ledger
application. Transaction security in the respective sub ledger application is always applied when
drilling down from sub ledger transactions to sub ledger journal entries
SLA: Enable Data Access Security in Sub ledger
This profile option determines whether the General Ledger Access Set security mechanism is
applied for a sub ledger application responsibility when viewing, reporting, or creating sub ledger
journal entries associated with a given ledger. The profile option enables you to combine data
access security with sub ledger transaction security and therefore control access to sub ledger
journal entries depending on the ledger to which they belong.
SLA: Additional Data Access Set
The SLA: Additional Data Access Set profile option, in conjunction with the GL: Data Access Set
profile option, controls which ledgers and balancing or management segment values you can
access when logging onto a responsibility. If SLA: Enable Data Access Security in Sub ledgers is
enabled for the responsibility, you have access only to the ledgers and balancing or management
segment values included in the data access sets assigned to the SLA: Additional Data Access Set
and GL: Data Access Set profile options.
SLA: Allow Reports Journal Source Override
This profile option applies only to the following reports:
 Open Account Balances Listing
 Third Party Balances Report
Enable this option to change the Journal Source parameter during report submission. If the
option is set to No, then you cannot change the value defaulted during report submission.

6.2 Sub ledger Accounting Reports
Following are key SLA Accounting reports which can be leveraged –
Journal Entries: Listing of sub ledger journal entries
Account Analysis: Listing of beginning and ending balances from General Ledger with merge of
sub ledger and General Ledger journal entries
Open Account Balances (a.k.a. Trial Balance): Listing of open balances by third party (leverages
business flows)
Third Party Balances: Balances by third party control account and third party
Period Close Exceptions Report: Listing of transactions / sub ledger journal entries that have not
yet been posted to General Ledger

6.3 Points to be noted
6.3.1 Fresh set up or upgrade from 11.5 to R12
Whenever, you upgrade from 11.5.x to R12, application Accounting Definitions will be in not
validated status. In order to start using Sub ledger accounting, you would need to Validate
Application Accounting Definitions by running the “Validate Application Accounting Definitions”
program.
You can optionally do an online validation of AADs

6.3.2 Modification and Validation of AAD
You would need to log into respective modules to modify AAD for that particular module. For
example if you need to modify AAD for Fixed Assets you would need to log in to Assets
Responsibility.
6.3.3 SLA Pre Upgrade Program
In a typical upgrade project, there is always a requirement to have 1-2 years of historical data in
SLA. To meet this requirement one must apply patch 5233248
During the upgrade, existing accounting data from the sub ledgers is upgraded into the new
Oracle Sub ledger Accounting data model. By default, the upgrade updates the data for the current
fiscal year, as well as the necessary periods of the previous fiscal, to ensure that there are at least
six periods included in the upgrade (occurs when the upgrade is performed in the first half of the
fiscal year).
You may need to run the SLA Pre-Upgrade program if you are using Oracle General Ledger and at
least one of the following sub ledgers: Assets, Cost Management, E-Business Tax, Payables,
Receivables, or Projects Accounting. This optional program allows you to change the default
number of periods of historic data to be upgraded. You can define a larger range of periods to be
upgraded, and you can decide to perform the upgrade for all or most of the data during the
downtime phase. This is an important decision because some of the Oracle Sub ledger accounting
functionality, such as accounting reversals and business flows, rely on the existence of previous
accounting data. If you do not perform a complete upgrade of the accounting data, Oracle Sub
ledger Accounting allows you to perform an additional upgrade of the data by running the SLA
post-upgrade process whenever the missing data is required (see Sub ledger Accounting). This
program is executed at the same time as daily operations. As a result, it may have an impact on
overall system performance. If you need to change the default number of periods of historic data
to be upgraded, you must apply patch 5233248 to your Release 11i APPL_TOP and submit
the SLA Pre-Upgrade program. When submitting this program, you can enter the following
parameters:
Migrate all sets of books: Possible values are Yes (SLA Pre-Upgrade program updates the
periods in all sets of books) or No (SLA Pre-Upgrade program updates the periods that belong to
the selected set of books).
• Set of books: Set of books to be upgraded where you have selected to upgrade one set of books.
• Start Date: Date to be used to determine the first period to be upgraded. Does not have to be
the starting date of a period - the initial period is determined as the first period in which this date
falls.
SLA Pre Upgrade Program might not be available as this is not enabled by defaults and might have
to be added to request group

6.3.4 SLA Patching
Some of the patches on SLA wipe out the customized Application Accounting Definitions. In order
to restore those, you can either replicate it manually post patch application or you have an option
of Exporting Application Accounting Definitions on the server and Import it later post patch
application.
Exporting Application Accounting Definitions
Importing Application Accounting Definitions

6.3.5 SLA Tables
XLA Table joins
GL_JE_BATCHES (je_batch_id) => GL_JE_HEADERS (je_batch_id)
GL_JE_HEADERS (je_header_id) => GL_JE_LINES (je_header_id)
GL_JE_LINES (je_header_id, je_line_num) => GL_IMPORT_REFERENCES (je_header_id,
je_line_num)
GL_IMPORT_REFERENCES (gl_sl_link_table, gl_sl_link_id) => XLA_AE_LINES
(gl_sl_link_table, gl_sl_link_id)
XLA_AE_LINES (application_id, ae_header_id) => XLA_AE_HEADERS (application_id,
ae_header_id)
XLA_AE_HEADERS (application_id, event_id) => XLA_EVENTS (application_id, event_id)
XLA_EVENTS (application_id, entity_id) => XLA.XLA_TRANSACTION_ENTITIES
(application_id, entity_id)
Transaction Entity Codes and ids
xte.entity_code = 'TRANSACTIONS' or 'RECEIPTS' or 'ADJUSTMENTS' or
'PURCHASE_ORDER' or 'AP_INVOICES' or 'AP_PAYMENTS' or
'MTL_ACCOUNTING_EVENTS' or 'WIP_ACCOUNTING_EVENTS’ xte.source_id_int_1 =
'INVOICE_ID' or 'CHECK_ID' or 'CUSTOMER_TRX_ID' or 'TRANSACTION_ID'
XLA_EVENTS:
SELECT * FROM xla_events xe WHERE xe.application_id = 222 AND xe.entity_id IN (SELECT
xte.entity_id FROM xla.xla_transaction_entities xte WHERE xte.application_id = 222 AND
xte.entity_code = TRANSACTIONS’ AND xte.source_id_int_1 = 10066)
XLA_AE_HEADERS:
SELECT * FROM xla_ae_headers xah WHERE xah.application_id = 222 AND xah.entity_id IN
(SELECT xte.entity_id FROM xla.xla_transaction_entities xte WHERE xte.application_id = 222
AND xte.entity_code = 'TRANSACTIONS' AND xte.source_id_int_1 = 10066)
XLA_AE_LINES:
SELECT xal.* FROM xla_ae_lines xal, xla_ae_headers xah WHERE xal.application_id =
ah.application_id AND xal.ae_header_id = xah.ae_header_id AND xah.application_id = 222
AND xah.entity_id IN (SELECT xte.entity_id FROM xla.xla_transaction_entities xte WHERE
xte.application_id = 222 AND xte.entity_code = 'TRANSACTIONS' AND xte.source_id_int_1 =
10066)
XLA_DISTRIBUTION_LINES:
SELECT xdl.* FROM xla_distribution_links xdl, xla_ae_headers xah WHERE dl.application_id =
xah.application_id AND xdl.ae_header_id = xah.ae_header_id AND xah.application_id = 222
AND xah.entity_id IN (SELECT xte.entity_id FROM la.xla_transaction_entities xte WHERE
xte.application_id = 222 AND xte.entity_code = 'TRANSACTIONS' AND xte.source_id_int_1 =
10066)

7 References
 Support.oracle.com
8 Appendix

White Paper Oracle Subledger Accounting

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