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
- 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
- A single LE is mapped to a Ledger
- An OU will have one Ledger assigned
- Therefore an OU only has one LE (that meas 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.
related post: Can I assign an Operating Unit to Multiple Legal Entities ?