For each subsidiary that has the Period End Journal Entries feature enabled, you must run the Historical Balances process. Creating historical balances journals is a one-time process to update account balances for correct reporting in period end mode. You must complete this step, even if you have no historical data, before you can create consolidation and income statement closing journals. If you have no historical data, 0 Results is displayed at the end of the process.
The Historical Balances step shows on the Task: Create Period End Journals page when historical balances journals have not yet been created for a subsidiary with the feature enabled. If the step has not yet been run for a specific Subsidiary-Source Subsidiary pair, then the step shows for the parent subsidiary that has the feature enabled.
Historical Consolidation Journals
Historical consolidation journals are created only if the subsidiary is a parent and the applicable settings are checked. One setting is the accounting preference Use Consolidation with Period End Journal Entries. If you use multi-book accounting, this preference applies only to subsidiaries in the primary accounting book. The Enable Consolidation option on the accounting book record controls whether consolidation journals are created for secondary accounting books. For more information, see Defining Subsidiary Settings for the Period End Journal Entries Feature.
These historical journals consolidate transactions in child subsidiaries to the parent from the first transactions to the end of the accounting period before you run the process. One historical consolidation journal consolidates transactions for each subsidiary and child subsidiary pair for the current fiscal year from the first period through the period before the journal is created. If the subsidiary pair has transactions before the current fiscal year, another historical consolidation journal is created for all prior fiscal years.
The calculation for historical consolidation journals uses the consolidated exchange rate type associated with each account included in the journal. For accounts that use the current rate type, the consolidated exchange rate is the rate for the period in which the Historical Balances step is run. This exchange rate is the same as the rate for the Consolidation step if you run both steps in the same period. Consequently, a consolidation journal created in the same period as the subsidiary’s historical consolidation journal does not include Rate Change lines for current rate type accounts.
A consolidated journal posts to the parent subsidiary that has the feature enabled for each child subsidiary below the parent in the hierarchy. For example, in a hierarchy with a parent, children, and grandchildren, consolidation journals are created for each parent-child and each parent-grandchild pair.
When the subsidiary preference Create Period End Journals by Segment is checked, separate historical consolidation journals are created for each distinct classification segment represented in the transactions for each accounting period. A classification segment is a combination of class, department, location, and custom segments with general ledger impact.
Historical Income Statement Closing Journals
Historical income statement closing journals are created for each subsidiary that has a fiscal year end prior to the period in which you run the process. If the subsidiary has no transactions as of the fiscal year end, no journal is created. In the year end calculations, the fiscal year end is determined by the fiscal calendar of the subsidiary for which the process is run. The fiscal calendars of any child subsidiaries are ignored. A child subsidiary’s fiscal calendar impacts the historical income statement closing journal only when you run the process for that child subsidiary.
The process creates a single historical income statement closing journal that calculates the total retained earnings amounts from all historical year ends for the selected subsidiary. For example, consider a subsidiary with a January through December fiscal calendar and history beginning with January 2015. If you run the process in February 2017, you get one historical income statement closing journal covering retained earnings through the end of fiscal year 2016.
When the subsidiary preference Create Period End Journals by Segment is checked, separate historical income statement closing journals are created for each distinct classification segment represented in the transactions for each accounting period. A classification segment is a combination of class, department, location, and custom segments with general ledger impact.