This appendix contains these topics:
International businesses can use multiple ledgers to fulfill the reporting requirements of both the corporate entity and the local legal authorities.
At year end, your company reports the yearly results during the first few days of January, while in France, for example, the law specifies that the company has until March to report fiscal activity to the authorities. The year is closed from the standpoint of the company, but is not yet closed from a local legal standpoint. The time difference means that the French company must make adjustments for three months that the corporate company does not have to see. These adjustments are typically recorded in an alternate ledger type.
A company can impose a fixed yearly exchange rate by management choice. In some countries, such as France, it is not acceptable from a legal point of view to ignore gains and losses in foreign currency. You can use the actual amounts (AA) ledger for the company, in which foreign transactions do not have any currency gains and losses, and an alternate ledger type in which you can book the currency gains and losses. In either case, the additional ledger is required to enter transactions that adjust either the local or the company's accounting system.
Three ledger types are not uncommon if fixed assets depreciation is involved. In this case, one ledger is used to record the depreciation that is calculated with the corporate depreciation method in the corporate ledger. An alternate ledger is used to record the depreciation that is calculated based on the depreciation method that is required by the local authorities. The difference between the two depreciation methods is recorded in a third ledger. For local legal reports, you sum the three ledger types to show the actual activity in the depreciation account.
To accommodate the need for multiple ledgers, J.D. Edwards software provides a user defined code table in which you can define all the ledgers you use as the ledger types on which you must report.
The actual amounts (AA) ledger is kept as the company's standard ledger, while alternate ledgers keep the adjusting transactions that justify the differences between the company books and the local legal books. You can specify ledger types in the report processing options. An inquiry or a report on the account shows the sum of the two ledger types and displays the actual activity in that account.