In R12, a new Legal Entity Configurator was introduced in financials and Legal Entities defined here are are assigned to Ledgers and/or Balancing Segments (Company Codes). However it is not possible to assign a Financials Legal Entity to an Operating Unit, you can only define a Default Legal Context (DLC) to an Operating Unit. This assignment can cause confusion as it is only possible to assign one DLC, but I can use more than one LE in that Operating Unit. The key word in DLC is default.
When I am in Payables or Receivables the LE is stamped on the transactions and used to identify the Legal Owner for Legal reporting as well as Tax calculation. The invoice exists within an OU and that OU has a ledger which will account the transactions, if that has more than one LE associated with it then a hierarchy of LE derivation is used to default an LE, the last resort being the DLC.
For example in AR the Legal Entity derivation hierarchy for transactions is
- Transaction Type
- Batch Source
Assigning a LE to a transaction type or batch source is optional and only the LE's mapped to the Ledger associated with the OU are available to assign.
So in R12 we have much better support for many LE accounted in a single OU as we clearly mark the LE on the transactions.