Mauritius Off Shore Jan 2004

First entry
New co started
Investment in subsidiaries
Singapore Jan 2004 entries

Opg TB
Purchases from III Party

No P & L activities
KSA Jan 2004 Entries
Opng entry in USD one USD = 3.75 SAR

Bank a\c Debit 440

To Eq Sh Cap Public 40(this a\c code will be used for
. elimination)
To Eq Sh Cap Holdg Co 400
Purchases from III Party in SAR
Sale to III Party in SAR

Sales Entry

Debtors Dr.
To Sales Cr.

Cogs Knock Off

Cogs Dr
To Inv Cr.
Translation

Setup \Currencies \ Rates \ Period

Rates Defined for Jan-2004
Historical Rates defined for the purpose of Capital Accounts (owner’s
equity)

Setup \ Currencies \ Rates\Historical

Run Translation for the month of Jan-2004

Currency \ Translation
Click All

The Value will get grayed out and Target Currency will get enabled
Once you enter the Target currency the period will get enabled and enter the period
as jan-04
Then Click Translate It will generate a request Id

Then View the Request Id for its proper completion

Now Go to View (Alt+V) Request (R) Click New Request (Alt + N)

Select “Trial Balance – Translation”

Enter the parameters
Save the Translated Trial balance output for jan 2004

Run the FSG “Imp” do not forget to give the currency as “USD” and the period as
jan-04

Save the Output.

The output shows that 6.58 is the profit.

Now the Minority Interest transfer is 10 percent of that 6.58 which is .658
But the JV in the consolidation book will not allow us to pass an entry which is less
than One unit (RS.1 or USD 1 or SAR 1)

So jan –04 will have a minority interest transfer entry for USD 1 and not .658

Run FSG for Balance Sheet purpose

IMP: Do not forget to give the “USD” Period and then “Segment Override”

Save the Output

Consolidation Set of Books Jan 2004 Entries

It is decided that Location “925” will be treated as Elimination Co.

Elimination Set Name is

Inter co Transactions

Click Accounts
Line 10 From Singapore “301” 45240 a\c code Inter Co Debtors will be eliminated in
Target “925” 45240

Line 20 From KSA “401” 31112 a\c code Inter co trade crs will be eliminated in
Target “925” 31112

Line 30 From Singapore “301” 51053 a\c code inter co product sales will be
eliminated in Target “925” 51053

Line 40 From Singapore “301” 65091 a\c code Inter co cogs will be eliminated in
Target “925” 65091
Creation of Consolidation Mapping Sets

Mau off shore Consolidation Mapping Set

Click Segment Rules

KSA Consolidation Mapping Set

Click Segment Rules

Singapore Consolidation Mapping Set

Click Segment Rules

Then When we click Transfer
You will get a pop up window Click No (even clicking yes is ok)
Enter the Period Standard
Period

Click Transfer
 In Consolidation Set of Books the Journals which got imported due to Running the
Consolidation Mapping Option

Mau off shore Consolidation Entries (will come as un posted we have to post it)
Singapore consolidation entries
KSA consolidation entries
KSA Consolidation Entries Contd….
Elimination Entries in Consolidation Set of Books

The Individual Profit and Loss a\c report was run and the profit was calculated.
It was 6.58 USD for KSA. Since one unit is the minimum we have to transfer that
amount not the fraction of 6.58 * 10/100= .658

The Location is “925” Elimination co

Minority Int (Profit and Loss) a\c Debit

To Minority Int (Balance Sheet) a\c Credit

Elimination of Capital and Investments
Location being “925” Elimination Co.

Capital a\c Debit (which will be a credit amount in KSA SOB)

To Investment a\c Credit (which will be a debit amount in Mau off SOB as
Investment in KSA)

Capital a\c Debit (which will be a credit amount in Singapore SOB)

To Investment a\c Credit(which will be a debit amount in Mau off SOB as Investment
in Singapore)
But we are not suppose to disturb the respective locations, these entries will be
passed in Elimination Co location. Manual Journal Entry
Transfer of Minority Interest Capital (Outsiders capital in KSA)
Equity Share Cap Public a\c debit (this will be a credit in KSA SOB)
To Minority Interest (bal sheet) a\c credit
Wrong Entry done selecting KSA as the location
Reversal of this wrong entry
Mauritius Off Shore Feb 2004 Entries

Purchases from III Parties

Sold 50% of the items purchased from III Parties.
Cogs Effect for that 50% items
Singapore Feb 2004 Entries

Half of Creditors paid thru bank

Creditors Debit
Bank Credit
Purchases from III Party

Inventory Debit
To Creditors Credit
Sale to iGTL KSA (Sales At Cost)

Inter Co Debtors Export Debit

To Inter Co Product Sales Credit
Cogs effect for Sale from iGTL Singapore to iGTL KSA (AT COST)

Inter Co Cogs a\c Debit

To Inventory a\c Credit
KSA Feb 2004

Feb 2004 Entries

Purchases from Singapore (inter co purchases and sales)

Purchases in USD Conversion rate being one USD $ equals 4 SAR

Sales of Goods purchased from iGTL Singapore

Purchased for 50 USD and out of which 40 USD worth of goods are sold for 80 USD

For KSA it is their Domestic Sales

Debtors Domestic Debit

To Product sales (relevant division) Credit
Cogs Knock off against sales to outsiders

Cogs (cost of product sale) a\c Debit

To Inventory a\c
Collection from Debtors

Bank a\c Debit

To Debtors a\c Credit
Payment of Rent to Guest House

Rent Guest House a\c Debit

To Bank a\c Credit
Translation Process

Enter the Monthly Rate for feb 2004

Enter Historical Rate if it differs from the Previous Period
(in this case there is no difference coz the Saudi Government has hedged the SAR
against USD so there is no fluctuation of currency value, the value remains the same
as of jan 04)

Run Translation
Run Trial balance- Translation
Consolidation Set of Books Feb 2004 Entries

KSA Consolidation entries Feb 2004

Mau off Consolidation Entries
Singapore Consolidation entries feb 2004
Reversal of Transfer of Profit Margin to Minority interest in Jan 2004

USD 1 was the amount, that has to be reversed.

Minority Interest (B\s ) a\c Debit (in jan 04 it was credited)

To Minority Interest (P and L) a\c Credit (in jan 04 it was debited)
Fresh Entry with Cumulative effect has to be given for the Minority Interest
profit margin part

In Elimination Location “925”

Minority Interest (P and L) a\c Debit (1 for jan and .5 for feb 2004) 1.5
To Minority Interest (Bal sheet) a\c Credit
Running the Elimination Set
It will generate the entries in the Target Location “925”
If it is debit in the source it will generate credit in the target
If it is credit in the source it will generate a debit entry in the target

The Source and Category will be “Elimination”

The Name of the Elimination Set will become the Name of the Journal
“Inter Co Transactions”
If you click Accounts you will get the details of source and target a\c of the particular
elimination set
Source from the Elimination
Category from the Accounts details of Elimination Set
Journal is From the Name of the Elimination Set

Inter co Debtors export (45240) was a debit item in Singapore location

Inter co Creditors (31122) was a credit item in KSA location
Inter co Product sale (51053) was a credit item in Singapore location
Inter co Cogs (65091) was a debit item in SINGAPORE Location

The Elimination Set creates the Opposite entries in Elimination Location.

45240 Credit
31122 Debit
51053 Debit
65091 Credit
Mauritius off shore Mar 2004 no entries

Singapore Mar 2004 entries

Receipt of Money from Inter co Transactions

Bank a\c Debit

Inter co Debtors Export a\c Credit
KSA March 2004 entries

Inter co creditors paid by KSA (to Singapore)

Inter co creditors Debit

Bank a\c Credit
The total amount owed is 200 SAR or 50 USD as on feb 2004

Now the amount against 50 USD is 187.50 fully paid

The 200 less 187.50 = 12.50 will remain as a Foreign Exchange Gain for iGTL KSA
But here it is not accounted like that.
Translation Process

Define the Monthly rate for march 2004

the March 2004 there is heavy change in the currency rate

Run the translation trial balance in USD

Run the Normal Trial Balance in SAR
Consolidation Set of Books Mar 2004 entries

From iGTL KSA SOB consolidation entries were transferred

Though there is only one transaction in the books of iGTL KSA, the Change in the
Exchange Rate has given effect to the Asset, Liability, Expenses and Revenue a\c.

Refer the entries of Singapore Consolidation, it will be only one entry (PTD) coz no
exchange rate changes (Singapore functional currency is USD)
Singapore Entries for consolidation

Since there is no exchange rate differences, the changes happened has been given
effect as an consolidation JV.
Elimination Set Run for March 2004

Enable Suspense a\c posting

Set the Translation a\c in the suspense a\c area.