| Oracle® Fusion ApplicationsFinancials Implementation Guide 11g Release 1 (11.1.2) Part Number E20375-02 | Contents | Previous | Next |
This chapter contains the following:
Manage Intercompany Balancing Rules
Manage Ledger Balancing Options
Manage Intercompany Balancing Rules
IntercompanyBalancing Rules: Explained
Intercompany balancing rules are used to generatethe accounts needed to balance journals that are out of balance by legal entity or primarybalancing segment values.
You specify the intercompany receivables and intercompanypayables accounts you want to use. The intercompany balancing featurethen uses these rules to generate the accounts of the balancing linesit creates.
Defining Intercompany Balancing Rules
You can define intercompany balancing rules at thefollowing rule levels:
Primary balancing segment
Legal entity
Ledger
Chart of accounts
The rules are evaluated in the order shown above.For example, you can define a Primary Balancing Segment rule and aLegal Entity level rule. If both rules are used to balance a particularjournal, the Primary Balancing Segment rule is used, as it has a higherprecedence.
You have flexibility in defining your intercompanybalancing rules. You can have a simple setup in which you define onerule for your chart of accounts. This rule is used for all intercompanybalancing for all ledgers that use this chart of accounts. Alternatively,you can have a more granular set of rules. For example, you can definea different rule for each legal entity and one chart of accounts ruleto cover any gaps in your rule definitions. You can gain even moregranularity by defining rules for specific journal and/or categorycombinations or intercompany transaction types.
IntercompanyBalancing Rules: Examples
This topic provides examples of intercompanybalancing rules and the intercompany balancing lines generated. Theserules are used to generate the accounts needed to balance journals that are out ofbalance by legal entity or primary balancing segment values.
Scenario
Simple Chart of Accounts
In this scenario the enterprise has one chart of accounts for all its ledgers. The chart of accounts has an intercompany segment.They are using this intercompany segment and the company segment toidentify the intercompany trading partners for each transaction.They do not have a need to track their intercompany activity at agranular level such as by journal source and journal category or by intercompanytransaction type.
Setup
InFusion USA Chart of Accounts
Segment Qualifier | Primary Balancing Segment | Second Balancing Segment | Third Balancing Segment | Account | Intercompany Segment |
|---|---|---|---|---|---|
Segment Name | Company (CO) | Cost Center (CC) | Product (PROD) | Account (ACCT) | Intercompany (IC) |
Ledger, Legal Entity, Primary BalancingSegment Value Assignments
Ledger | Legal Entity | Primary Balancing Segment Value |
|---|---|---|
InFusion USA | InFusion Farms | 3100, 3200, 3300, 3400, 3500 |
InFusion USA | InFusion Textiles | 4000 |
InFusion USA | InFusion Products (East) | 5000 |
InFusion USA | InFusion Products (West) | 6000 |
InFusion USA | 1000, 9000 |
Chart of Accounts Rule
Rule Number | Chart of Accounts | AR Account | AP Account | Source | Category | Transaction Type |
|---|---|---|---|---|---|---|
1 | InFusion USA Chart of Accounts | 1000 - 000 - 0000 - 13010 - 0000 | 1000 - 000 - 0000 - 21010 - 0000 | Other | Other | None |
Journal Balancing
See AlsoNetSuite Applications SuiteHow to Consolidate Subsidiary Accounts | AccountsIQInter-Company Transactions after Consolidation: 5 PrinciplesWhat Is Intercompany Accounting?Journal before Balancing
Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | |
2 | Liability | InFusion Textiles | 4000 | 500 | 1300 | 40118 | 0000 | 150 |
Journal Balancing
Journal after Balancing
Uses Rule | Line | Line Type | Legal Entity | Company | Cost Center | Product | Account | Intercompany | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | ||
2 | Liability | InFusion Textiles | 4000 | 500 | 1300 | 40118 | 0000 | 150 | ||
1 | 3 | IC AP | InFusion Farms | 3100 | 100 | 1200 | 21010 | 4000 | 150 | |
1 | 4 | IC AR | InFusion Textiles | 4000 | 500 | 1300 | 13010 | 3100 | 150 |
Scenario
Legal Entity and Chart of Accounts Rules
In this example the legal Entity InFusion Textilesintercompany manufacturing activities are tracked separately fromits non-manufacturing activities. In order to achieve this legal entitylevel rules are defined specifically between the legal entity InFusionTextiles and the two manufacturing legal entities, InFusion Products(East) and InFusion Products (West). A chart of accounts rule iscreated to cover all other intercompany activities.
Setup
InFusion USA Chart of Accounts
Segment Qualifier | Primary Balancing Segment | Second Balancing Segment | Third Balancing Segment | Account | Intercompany Segment |
|---|---|---|---|---|---|
Segment Name | Company | Cost Center | Product | Account | Intercompany |
Ledger, Legal Entity, Primary BalancingSegment Value Assignments
Ledger | Legal Entity | Primary Balancing Segment Value |
|---|---|---|
InFusion USA | InFusion Farms | 3100, 3200, 3300, 3400, 3500 |
InFusion USA | InFusion Textiles | 4000 |
InFusion USA | InFusion Products (East) | 5000 |
InFusion USA | InFusion Products (West) | 6000 |
InFusion USA | 1000, 9000 |
Chart of Accounts Rule
Rule Number | Chart of Accounts | AR Account | AP Account | Source | Category | Transaction Type |
|---|---|---|---|---|---|---|
2 | InFusion USA Chart of Accounts | 1000 - 000 - 0000 - 13050 - 0000 | 1000 - 000 - 0000 - 21050 - 0000 | Other | Other | None |
Legal Entity Level Rule
Rule No. | From Legal Entity | To Legal Entity | AR Account | AP Account | Source | Category | Transaction Type |
|---|---|---|---|---|---|---|---|
3 | InFusion Textiles | InFusion Products (West) | 1000 - 000 - 0000 - 13020 - 0000 | 1000 - 000 - 0000 - 21020 - 0000 | Other | Other | None |
4 | InFusion Textiles | InFusion Products (East) | 1000 - 000 - 0000 - 13030 - 0000 | 1000 - 000 - 0000 - 21030 - 0000 | Other | Other | None |
Journal Balancing
Journal before Balancing
Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | |
2 | Expense | InFusion Products (East) | 5000 | 100 | 1200 | 52340 | 0000 | 200 | |
3 | Expense | InFusion Products (West) | 6000 | 200 | 1300 | 52345 | 0000 | 300 | |
4 | Liability | InFusion Textiles | 4000 | 500 | 1300 | 40118 | 0000 | 650 |
Journal Balancing
Journal after Balancing
Uses Rule | Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | ||
2 | Expense | InFusionProducts (East) | 5000 | 100 | 1200 | 52340 | 0000 | 200 | ||
3 | Expense | InFusionProducts (West) | 6000 | 200 | 1300 | 52345 | 0000 | 300 | ||
4 | Liability | InFusion Textiles | 4000 | 500 | 1300 | 40118 | 0000 | 650 | ||
2 | 5 | IC AR | InFusion Textiles | 4000 | 500 | 1300 | 13050 | 3100 | 150 | |
2 | 6 | IC AP | InFusion Farms | 3100 | 100 | 1200 | 21050 | 4000 | 150 | |
4 | 7 | IC AR | InFusion Textiles | 4000 | 500 | 1300 | 13030 | 5000 | 200 | |
2 | 8 | IC AP | InFusionProducts(East) | 5000 | 100 | 1200 | 21050 | 4000 | 200 | |
3 | 9 | IC AR | InFusion Textiles | 4000 | 500 | 1300 | 13020 | 6000 | 300 | |
2 | 10 | IC AP | InFusionProducts (West) | 6000 | 200 | 1300 | 21050 | 4000 | 300 |
Manage Ledger Balancing Options
Defining LedgerBalancing Options: Explained
Ledger balancing options are defined for theledger to balance the second balancing segment and/or thethird balancing segment, when a transaction is unbalanced by one ofthese segments.
Ledger balancing options include thefollowing settings:
Receivables and payables accountsused for ledger balancing
Summarization options
Clearing company options
Receivables and Payables Accounts used for LedgerBalancing
You can choose to specify the receivables and payablesaccounts to be used, if your chart of accounts has the secondbalancing segment and/or the third balancing segment enabled. Theseaccounts are used for the balancing lines generated when a journal is balanced by its primarybalancing segment values but is not balanced by its secondbalancing segment and/or third balancing segment.
Summarization Options
You can choose to summarize balancing lines generatedfor a primary balancing segment out of balance scenario, where allthe primary balancing segment values are assigned to the same legal entity. Youdo this by specifying the Summarization option of Summary Net or Detail.You can choose to summarize by primary balancing segment value oralternatively have individual balancing lines (that have not beensummarized) generated. Note that summarization always applies to balancinglines generated in a cross legal entity scenario.
Clearing Company Options
You can choose to set clearing company options tobalance a journal with different primary balancing segment valuesthat all belong to a single legal entity. Set the following optionsto handle your clearing company balancing.
Clearing company condition
You can choose to balance using aclearing company value for all journals or for journals with manylegal entities on the debit side and many legal entities on the creditside.
The default value for this optionis to error Many-to-Many journals.
Clearing Company Source
Choose how the clearing company valueis derived for your balancing lines, from the following options:
Default clearing balancing segmentvalue. Choose this option if you want a single specific primary balancingsegment value for your clearing company.
Default Rule. Choose this optionif you want to allow the system to derive the clearing company valuefrom a default intercompany balancing rule.
Manually entered clearing balancingsegment value. Choose this option if you want to enter the clearingcompany value when you create a journal.
Clearing Company Value
If you chose the default clearingbalancing segment value as your clearing company source, you can enteryour chosen primary balancing segment value in this field.
Defining LedgerBalancing Options: Examples
This topic provides examples of ledger balancingoptions, the setup required, and the journal before and after balancing.
Scenario
Simple ledger balancing option with no clearing company options
In this scenario the enterprise has the second balancingsegment and the third balancing segment enabled for its chart of accounts.The journal is balanced by primary balancing segment but is out ofbalance by the second balancing segment and the third balancing segment.
Setup
InFusion USA Chart of Accounts
Segment Qualifier | Primary Balancing Segment | Second Balancing Segment | Third Balancing Segment | Account | Intercompany Segment |
|---|---|---|---|---|---|
Segment Name | Company CO | Cost Center CC | Product PROD | Account ACCT | Intercompany IC |
Ledger, Legal Entity, Primary BalancingSegment Value Assignments
Ledger | Legal Entity | Primary Balancing Segment Value |
|---|---|---|
InFusion USA | InFusion Farms | 3100, 3200, 3300, 3400, 3500 |
InFusion USA | InFusion Textiles | 4000 |
InFusion USA | InFusion Products (East) | 5000 |
InFusion USA | InFusion Products (West) | 6000 |
InFusion USA | 1000, 9000 |
Ledger Balancing Options
Rule Number | Ledger | Source | Category | Transaction Type | AR Account | AP Account |
|---|---|---|---|---|---|---|
1 | InFusion USA | Other | Other | None | 1000 - 000 - 0000 - 13010 - 0000 | 1000 - 000 - 0000 - 21010 - 0000 |
Journal Balancing
Journal Before Balancing
Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | |
2 | Liability | InFusion Farms | 3100 | 500 | 1300 | 40118 | 0000 | 150 |
Journal Balancing
Journal after Balancing
Uses Rule | Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | ||
2 | Liability | InFusion Farms | 3100 | 500 | 1300 | 40118 | 0000 | 150 | ||
1 | 3 | AP | InFusion Farms | 3100 | 100 | 1200 | 21010 | 0000 | 150 | |
1 | 4 | AR | InFusion Farms | 3100 | 500 | 1300 | 13010 | 0000 | 150 |
Scenario
Ledger balancing options with detail summarizationand clearing company options set
In this scenario the enterprise has the second balancingsegment and the third balancing segment enabled for its chart of accounts. Management has decided to use a clearing company for balancing Many-to-Manyjournals only. Since the primary balancing segment values in the journalare out of balance intercompany balancing is required. Additionallysince clearing company options have been specified they will be usedto balance the journal. Note that if the primary balancing segmentvalues were balanced and only the second balancing segment and thethird balancing segment were out of balance, the clearing companyoptions would not be used.
Setup
InFusion 1000, USA Chart of Accounts
Segment Qualifier | Primary Balancing Segment | Second Balancing Segment | Third Balancing Segment | Intercompany Segment | |
|---|---|---|---|---|---|
Segment Name | Company | Cost Center | Product | Account | Intercompany |
Ledger, Legal Entity, Primary BalancingSegment Value Assignments
Ledger | Legal Entity | Primary Balancing Segment Value |
|---|---|---|
InFusion USA | InFusion Farms | 3100, 3200, 3300, 3400, 3500 |
InFusion USA | InFusion Textiles | 4000 |
InFusion USA | InFusion Products (East) | 5000 |
InFusion USA | InFusion Products (West) | 6000 |
InFusion USA | 1000, 9000 |
Chart of Accounts Rule
Rule Number | Chart of Accounts | AR Account | AP Account | Source | Category | Transaction Type |
|---|---|---|---|---|---|---|
1 | InFusion USA Chart of Accounts | 1000 - 000 - 0000 - 13050 - 0000 | 1000 - 000 - 0000 - 21050 - 0000 | Other | Other | None |
Ledger Balancing Options
Rule Number | Ledger | Source | Category | Transaction Type | AR Account | AP Account |
|---|---|---|---|---|---|---|
2 | InFusion USA | Other | Other | None | 1000 - 000 - 0000 - 13010 - 0000 | 1000 - 000 - 0000 - 21010 - 0000 |
Clearing Company Options
Rule Number | Ledger | Source | Category | Transaction Type | Condition | Source | Value |
|---|---|---|---|---|---|---|---|
2 | InFusion USA | Other | Other | None | Use for many-to-many journals only | Default clearing balancing segment value | 9000 |
Note
The Ledger Balancing Options and Clearing CompanyOptions appear as one line on the form.
Journal Balancing
Journal before Balancing
Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | |
2 | Expense | InFusion Farms | 3100 | 300 | 1200 | 52340 | 0000 | 200 | |
3 | Expense | InFusion Farms | 3300 | 200 | 1300 | 52345 | 0000 | 300 | |
4 | Liability | InFusion Farms | 3400 | 500 | 1300 | 40118 | 0000 | 320 | |
5 | Liability | InFusion Farms | 3500 | 600 | 1400 | 40112 | 0000 | 330 |
Journal Balancing
Journal after Balancing
Uses Rule | Line | Line Type | Legal Entity | CO | CC | PROD | ACCT | IC | Debit | Credit |
|---|---|---|---|---|---|---|---|---|---|---|
1 | Expense | InFusion Farms | 3100 | 100 | 1200 | 52330 | 0000 | 150 | ||
2 | Expense | InFusion Farms | 3100 | 300 | 1200 | 52340 | 0000 | 200 | ||
3 | Expense | InFusion Farms | 3300 | 200 | 1300 | 52345 | 0000 | 300 | ||
4 | Liability | InFusion Farms | 3400 | 500 | 1300 | 40118 | 0000 | 320 | ||
5 | Liability | InFusion Farms | 3500 | 600 | 1400 | 40112 | 0000 | 330 | ||
1 | 6 | IC AR | 9000 | 000 | 0000 | 13050 | 3100 | 150 | ||
1 | 7 | IC AP | 3100 | 100 | 1200 | 21050 | 9000 | 150 | ||
1 | 8 | IC AR | 9000 | 000 | 0000 | 13050 | 3100 | 200 | ||
1 | 9 | IC AP | 3100 | 300 | 1200 | 21050 | 9000 | 200 | ||
1 | 10 | IC AR | 9000 | 000 | 0000 | 13050 | 3300 | 300 | ||
1 | 11 | IC AP | 3300 | 200 | 1300 | 21050 | 9000 | 300 | ||
1 | 12 | IC AR | 3400 | 200 | 1300 | 13050 | 9000 | 320 | ||
1 | 13 | IC AP | 9000 | 000 | 000 | 21050 | 3400 | 320 | ||
1 | 14 | IC AR | 3500 | 600 | 1400 | 13050 | 9000 | 330 | ||
1 | 15 | IC AP | 9000 | 000 | 000 | 21050 | 3500 | 330 |
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