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Defining Intracompany Balancing Rules

Posted on January 28, 2008 by David Haimes

Written by Rohit Kathuria and David Haimes

In order to take advantage of the automatic Intercompany balancing during GL posting and SLA Accounting you first need to define the accounts you want us to use.

Intercompany and Intracompany Accounts in R12 are defined in two different Set Up Pages, the Intracompany Balancing Rules are what we had in 11i for Intercompany Accounts (confusing I know) - this is where you will find the rules you had in 11i of you are upgrading from 11i. If you don’t want to take advantage of the Legal Entity Configurator product and define Legal Entities and map them to your accounting structure, you can still go ahead and use the intracompany rules. If you start to map your Legal Entities to Ledgers and/or Balancing Segment Values (BSV) then you will want to be sure you complete the job, so there is no ambiguity in your setup. Consider the example below for BSV 10, 20, 30, 40, 80 and 90 :

Alpha Enterprises

The France Ledger is mapped to the FR LE, so all BSV in that ledger are assumed to be owned by LE France. However the UK Ledger has BSV 10 and 20 mapped to the UK LE, but 80 and 90 are not mapped to anything we have no way to know what LE they are assigned to.

You will be able to set up Intracompany balancing rules

  • Between 10 and 20
  • Between 80 and 90
  • between 30 and 40

You can set up Intercompany Accounts between

  • 10 and 30 or 40
  • 20 and 30 or 40
  • LE France and LE UK

All the above are unambiguous, we know what we are dealing with. The 80 and 90 BSV are in the same ledger with no LE at Ledger or BSV level so we just assume that any transactions between 80 and 90 are intracompany.

We would not allow you to create Intracompany rules between

  • 80 and 10 or 20
  • 90 and 10 or 20

This is because we don’t know if 80 and 90 are in the UK LE or not, if they are then assign those BSV to LE UK too and you’re good to go.

If 80 and 90 aren’t in the UK LE then what LE do they belong to? Once you map them to the to the appropriate LE then you will need to define Intercompany accounts for them.

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

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2 Responses to “Defining Intracompany Balancing Rules”

  1. Ashish, on March 6th, 2008 at 9:10 am Said:

    Hi David,

    Thanks for the illustrative example. I have a question on this:
    In the article above, you said that we cannot create intracompany b/w BSV 80/90 and 10/20 as 80,90 are not attached to any LE.
    Does that mean that we cannot transact between these BSV? Or if we do transact, the Journals would be out of balance?
    They cannot be treated as intercompany as they are in the same ledger, right?

    Thanks,
    Ashish

  2. David Haimes, on March 6th, 2008 at 1:37 pm Said:

    There are two questions
    1) Can bsv 80/90 transact?
    - Yes they can transact.
    However you cannot define intercompany balancing rules for them and so we would not perform automatic balancing between these two BSV if a journal was entered with them on that was out of balance by bsv. However if you manually balance the journals with bsv 80 and 90 then they can transact - we would not prevent that balanced journal being enterd and posted.

    2) They cannot be treated as intercompany as they are in the same ledger?
    - No not true. Those BSV could each be mapped ot a different LEgal Entity and then anything between them in intercompany.

    It is possible to model more than one BSV in a Ledger as I detail in this post.
    http://davidhaimes.wordpress.com/2007/11/21/how-do-i-define-my-legal-entities/

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