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Intercompany Vs Intracompany

Posted on November 26, 2007 by David Haimes

When I present about Oracle Intercompany products I always start with a couple of slides explaining the difference between Intercompany and Intracompany and why we might care about the difference. This is sometimes obvious but often the two terms are used interchangeably or the term Intercompany is used generically to discuss Inter and Intra company (Oracle Apps is certainly guilty of the latter). So here goes…

InterCompany Transactions are between two or more related internal legal entities with common control, i.e. in the same enterprise (Inter = Latin for “BETWEEN”)

IntraCompany Transactions are between two or more entities within the same legal entity (Intra = Latin for “WITHIN”)

So that’s it then and a free latin lesson to boot. No? Want more?

get-out-of-jail.jpg

Well the real difference is that Intracompany processing is determined by company management, whereas Intercompany has to follow the law.

The amount the R&D department pays the manufacturing department of the same LE for some test chips(of the silicon kind) is to be sorted out between themselves. However when my manufacturing company in Ireland sell chips to their sister company in Germany you can imagine the tax authorities care about how much they charge because they get a % of it in taxes. This what transfer pricing is all about, it is important to get it right and you need to follow the rules and be prepared to open up your books to the tax people to demonstrate you followed the rules.

In R12 we have changed the way you set up the accounts formerly known as Intercompany accounts. You can enter Intercompany Accounts which are between pairs of Legal Entities, regardless of the ledger, chart of accounts, etc they are on. There is also the Intracompany Accounts screen where the accounts are defined from BSV to BSV with all the options that are available in 11i. More on this in later posts.\

Update: A number of new related posts - an example of Inter and Intra set up, where to set up Intercompany and Intracompany accounts.  Introduction to the R12 Legal Entity Configurator product.

Possibly related posts: (automatically generated)

Filed under: AGIS, Intercompany, Oracle Financials, Oracle Intercompany | Tagged: , , ,

« Cleaning Out My Closet Intercompany Segment in Secondary Ledgers »

6 Responses to “Intercompany Vs Intracompany”

  1. Jake, on November 27th, 2007 at 3:53 pm Said:

    Dude, snap shot has to go.

    Thanks for covering a feature that I designed. I feel that I need to at least attempt to prove that I did actually work in the past.

  2. davidhaimes, on November 30th, 2007 at 11:44 pm Said:

    I can confirm Jake designed this, I remember many, many whiteboard sessions figuring out some of the fine details.

    Jake’s ‘complex journal’ use case is infamous and we carried into our fusion designs and managed to make it way more complex - come check it out some time jake?

  3. Ahmad Bilal, on February 16th, 2008 at 9:57 pm Said:

    David you are doing a gr8 job keep it up.

    i would suggest if you elaborate this by using snapshots or by using example from any module / business.

    Anyways gr8.

    regards………Ahmad Bilal

  4. David Haimes, on February 17th, 2008 at 9:47 am Said:

    Ahmad,

    Thanks for your feedback - I have updated this post to links to some I have done since with a little more detail or examples.

    I need to keep working to get more detailed examples as you suggest… watch this space I’m working on it.

  5. Navneeth, on April 6th, 2008 at 5:52 am Said:

    Hi!!
    I have a problem with Bank Account Transfer functionality between 2 banks in the same legal entity.

    I have defined Intracompany balancing rules - one for my legal entity and one dummy legal entity called ‘No Legal Entity’. I did these setups according to Metalink: Bug No. 6113591.
    Also, Assigned the Legal Entity to Cash Management User to enable Bank Transfer. But Still I am getting the following message when I try to validate the Bank Transfer:

    1. FUN_INTRA_RULE_NOT_ASSIGNED
    2. Intercompany balancing was unable to generate the intercompany account.

    Can you help me.

  6. Eric Van Cleve, on June 17th, 2008 at 11:51 am Said:

    I know that AGIS is able to use data promotion to the subledgers. Is it capable of data extraction from the subledgers?

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