In the real world a Legal Entity (LE) can enter into
contracts, own cash (bank accounts), employ people, pay taxes, be sued and similar.
In Oracle Financials Release 12, a whole new product; Legal Entity
Configurator, was created to manage them. We allow you to define your real-world
Legal Entities and then map them to the E-Business Suite objects and
structures. Transactions are stamped with an owning (first party) Legal Entity
and that will be used to drive tax, accounting, intercompany and
Legal Reporting.
So, let’s look at the relationships LE have to other
E-Business suite objects.
1- Accounting Structures
In the General Ledger Set Up a
Legal Entity can be mapped to
·
A Single Ledger
·
One or more Balancing Segment Values (aka
Company Code) within a ledger.
2 – Operating Unit
There is no explicit mapping of
Legal Entity to an OU, the relationship is derived from the ledger assigned to
the OU and the Legal Entity mappings to ledgers as detailed above.
So how might you set up your LE
in relation to your other set up in financials? There are two implementation
models
1: Many
·
LE are mapped to the Balancing Segment Value
(BSV, aka Company code) within a Ledger, so multiple LE are accounted for in a
ledger.
·
An OU will have one Ledger assigned so
transactions for many LE are processed and accounted in a single OU
1:1:1
·
A single LE is mapped to a Ledger
·
An OU will have one Ledger assigned
·
Therefore, an OU only has one LE (that means it
is easy to derive the LE given the OU)
So what model should you use?
That depends where the LE are registered.
The 1:M model is recommended and preferred in the US, the 1:1:1 model is recommended for most non-US regions.
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