Intercompany Accounting and Transfer Pricing in Oracle EBS
Intercompany Accounting and Transfer Pricing in Oracle EBS 11 i. 10 Rixin Zhu Manager, Cost Management Systems Oracle USA, Inc. March, 2006 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Agenda • • 1 -2 Overview Supported Flows and Features Logical Transactions Parent Transactions Accounting Setups Material Transactions and Distributions Forms This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Overview • Support of Internal Order Transfer Available in 11 i. 9 – Transfer Pricing + Intercompany Invoicing • Enhanced Drop Shipment and Shared Procurement Available in 11 i. 10 – Internal Drop Shipment to Customer – Shared Procurement – External Drop Shipment • Cross-Product Effort: – – – 1 -3 Inventory Purchasing (Receiving) Order Management Cost Management AR/AP This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
White Papers 1 -4 • Transfer Price Accounting in Oracle SCM, Feb 2006 (Metalink Note: 360106. 1) • Overview of Intercompany Invoicing, July 2005 (Metalink Note: 336129. 1) • Intercompany Invoicing and Advance Pricing Integration, May 2002 (Metalink URL: https: //metalink. oracle. com/cgibin/cr/getfile. cgi? p_attid=72450. 1: 284025) This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Internal Order Transfer Sending Organization Inventory Cost: $102 Transfer Price: $120 Receiving Organization Inventory Cost: $108 Features • Account for the shipment as an (external) Sales Order and account for the receipt as a Purchase Order. • Deriving the Cost of Goods Sold Account for the shipping organization as per the standard Oracle functionality. • Customers can choose whether to use the Transfer Price as the incoming cost to the receiving organization. • Internal profit margin is supported in Margin Analysis Report. Limitations • No support of return and correction. • Only support transfers across operating units. • Only in-transit transfers are supported. 1 -5 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Enhanced Drop Shipment and Shared Procurement • • • Separate financial transaction flows from physical flows Support infinite number of intermediate operating units Allow intermediate operating units to record COGS and Revenue on the logical internal sale of goods Support documents for the transaction flow (intercompany invoices) Support forward as well as return flows Costing features – – 1 -6 Perform all of the Inventory accounting distributions for a transaction flow in a single commit cycle, and display them together on the form Costs and Quantities in intermediate organizations are not impacted This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Transaction Flows Shared Procurement T Ship To OU I P S Procuring OU Shared Procurement • Purchase order is created in operating unit P and received in a warehouse in operating unit T, with one or more intermediate operating units • Execution of the receipt (into RI) in warehouse T kicks off the creation of receiving accounting events and logical inventory transactions in I and P. • Accounting takes place in all operating units to record the obligations and intercompany COGS / revenue. • Item costs and quantities in the procuring and intermediate operating units are not impacted 1 -7 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Transaction Flows Internal Drop Shipment to Customer C O Order-Booking OU I F Ship From OU Internal Drop Shipment to Customer • Order is booked in operating unit O and shipped from a warehouse in operating unit F, with one or more intermediate operating units (source type: internal) • Execution of the ship confirm from warehouse F kicks off the creation of logical inventory transactions in I and O • Accounting takes place in all operating units to record the revenue and COGS for the transaction Limitation • Internal drop shipment to internal organization is not supported. For example, if C is an internal organization and it is an internal sales order. 1 -8 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Transaction Flows External Drop Shipment C O Order-Booking OU I F/T Ship From/To OU I P S Procuring OU External Drop Shipment • Order is booked in operating unit O and specifies a ship-from warehouse in operating unit F/T, with one or more intermediate operating units (source type: external). • Run requisition import in F/T to create a requisition for the item. • Run Autocreate process in F/T to create a purchase order. Be sure to specify operating unit P as the procuring OU, specify the supplier S, and the warehouse in F/T as the ship-to location for the PO. Approve the PO in operating unit P. • Execute the direct delivery receipt in warehouse F/T to kick off the creation of RCV accounting events and INV logical transactions. 1 -9 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Logical Transactions Procurement Flow RECEIVE LOGICAL RECEIVE T I Ship To OU LOGICAL RECEIVE P S Procuring OU Functional Event: Perform Receive (into RI) in warehouse T The following logical transactions are created in INV as a result • P logical PO receipt logical intercompany sales issue • I logical intercompany procurement receipt logical intercompany sales issue • T <none> 1 -10 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Logical Transactions Shipment Flow C O Order-Booking OU I F Ship From OU Functional Event: Perform Ship Confirm out of warehouse F The following transactions are created in INV as a result • F [physical] sales order issue logical intercompany sales issue • I logical intercompany shipment receipt logical intercompany sales issue • O logical intercompany shipment receipt logical sales order issue 1 -11 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Logical Transactions External Drop Shipment Procurement + Shipment flow RECEIVE C O I F/T LOGICAL RECEIVE I LOGICAL RECEIVE P S DELIVER Order-Booking OU Ship From/To OU Procuring OU Functional Event: Perform DIRECT DELIVERY receipt of item into warehouse F/T The following logical (no physical) transactions are created in INV as a result • P logical PO receipt logical intercompany sales issue • I logical intercompany PROCUREMENT receipt logical intercompany sales issue • F/T logical PO receipt – replaces delivery to inventory logical intercompany sales issue • I logical intercompany SHIPMENT receipt logical intercompany sales issue • O logical intercompany SHIPMENT receipt logical sales order issue 1 -12 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Parent Transactions • • • Accounting for all related logical events created at once Grouping is achieved by linking all logical events together via the parent transaction ID – new column in mtl_material_transactions Parent transaction is always in the FROM operating unit of the flow – – • 1 -13 Physical transaction if one exists (shipment flows): sales order issue and RMA receipt Logical transaction otherwise: Logical PO receipt and Logical RTV in procurement flows. Logical PO receipt during deliver in shipment flows of external drop shipments All accounting for a single flow is displayed together on the Material Distributions form (grouped together by parent transaction ID) This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Parent Transactions Forward P Procurement Flows Return S P Logical RTV Logical PO receipt Shipment Flows C C P [physical] RMA receipt [physical] Sales Order Issue Shipment Flow – External Drop Ship S P … Logical PO Receipt (created during direct deliver) 1 -14 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting – Internal Order Option 1: Price As Incoming Cost Sending Organization O 1 Inventory Cost: $102 INV Valuation (O 1) Event 1. Shipment 102 In-transit (O 1) (O 2) 102 1 -15 120 Receiving Organization O 2 Standard Cost: $108 INV Valuation (O 2) Accrual PPV (O 2) 108 120 108 I/C Receivable (O 1) 4. I/C AP FOB Shipment COGS 2. Receipt 3. I/C AR Transfer Price: $120 12 108 I/C Revenue Accrual I/C Payable (O 1) (O 2) 120 120 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting – Internal Order Option 2: Price Not As Incoming Cost Transfer Price: $120 Sending Organization O 1 Inventory Cost: $102 INV Valuation (O 1) Event 1. Shipment 102 COGS In-transit (O 1) (O 2) 102 I/C Revenue Receivable (O 1) 4. I/C AP 1 -16 PPV Accrual (O 2) 6 108 120 INV Valuation (O 2) 108 2. Receipt 3. I/C AR FOB Shipment Receiving Organization O 2 Standard Cost: $108 120 Profit In Inventory (O 2) 18 108 Accrual I/C Payable (O 2) 120 120 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting Procurement Flow – P 60 C 50 O 40 I 2 1. RCV Receive 2. INV Log PO Rcpt 3. INV Log I/C Ship 1 -17 20 F/T Order-Booking OU Event 30 I P Ship From/To OU Accrual 10 Clearing 10 S Procuring OU Inv Valuation I/C COGS 10 10 10 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting Procurement Flow – I 60 50 C O 40 I 2 1. RCV Receive 2. INV Log I/C Proc Rcpt 3. INV Log I/C Ship 1 -18 20 F/T Order-Booking OU Event 30 I P Ship From/To OU I/C Accrual 20 Clearing 10 S Procuring OU Inv Valuation I/C COGS 20 20 20 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting Shipment Flow – F/T 60 50 C O 40 I 2 1. RCV Receive 2. INV Log PO Rcpt 3. INV Log I/C Ship 1 -19 20 F/T Order-Booking OU Event 30 I P Ship From/To OU I/C Accrual 30 Clearing 10 S Procuring OU Inv Valuation I/C COGS 30 30 30 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting Shipment Flow – I 2 60 C 50 O 40 I 2 Order-Booking OU Event 1. INV Log I/C Ship Rcpt 2. INV Log I/C Ship 1 -20 30 F/T 20 I P Ship From/To OU I/C Accrual 40 10 S Procuring OU Inv Valuation I/C COGS 40 40 40 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Accounting Shipment Flow – O 60 C 50 O 40 I Order-Booking OU Event 1. INV Log I/C Ship Rcpt 2. INV Log SO Issue 1 -21 30 F/T 20 I P Ship From/To OU I/C Accrual 50 10 S Procuring OU Inv Valuation I/C COGS 50 50 50 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Setups Transaction Flow 1 -22 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Setups Intercompany Relations 1 -23 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Setups Transfer Price 1 -24 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Forms Material Transactions Form 1 -25 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Forms Material Distributions Form 1 -26 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Forms Material Distributions Form (2) 1 -27 This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
Thank You. This presentation is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making a purchasing decision.
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