![]() ![]() Intercompany accounts may be defined at the legal entity level. The offsetting credit goes into the legal entity's intercompany payables account. The offsetting debit for a legal entity goes into its intercompany receivables account. Since multiple accounts may be defined for the same date range, the Balancing API picks the accounts flagged with the Use for Balancing indicator. The Balancing API uses the intercompany accounts defined for the relevant effective date range. These journals are balanced for each legal entity by using their intercompany accounts. Intercompany journals involve balancing segment values that map to different legal entities. ![]() This will prevent the Balancing API from correctly generating the intercompany segment value. Note: Do not qualify the same segment as for your chart of accounts. The assigned legal entities and balancing segment values will not be visible in the Intercompany Setup pages unless the Accounting Setup status is Complete. Note: You must complete the accounting setup in General Ledger before setting up Intercompany. In Accounting Setup Manager, select Enable Intracompany Balancing in the Update Ledger: Ledger Options page to balance intracompany journals automatically. Often, these transactions pass through a clearing organization, which is also represented by a balancing segment value.īefore setting up intercompany accounts and intracompany balancing rules, you must complete the following setup steps:Īdditional Information: Creating Accounting Setups, Oracle Financials Implementation Guide A group could be a profit center, manufacturing plant, a warehouse, a cost center, or any other organization that represents a subset of a legal entity. ![]() Intracompany balancing for journals that involve different groups within the same legal entity, represented by balancing segment values. Intercompany accounting for transactions performed between separate legal entities that belong to the same corporate enterprise. There are two types of solutions to address intercompany and intracompany accounting needs: You should also define any accounts you want to use for intracompany balancing during implementation. ![]() Identifying these accounts allows your organization to book transactions identified as intercompany transactions into the special accounts. You should define intercompany accounts as part of the chart of accounts setup process. This facilitates the consolidation process by segregating all intercompany accounting into specific accounts. To efficiently identify and eliminate intercompany transactions at the close of an accounting period, most organizations use specific accounts to book these transactions. Failure to properly eliminate these intercompany transactions can result in erroneous and overstated financial results including activities between related parties and can lead to legal repercussions. When transactions occur between two related legal entities in an intercompany organization or between two groups in the same legal entity, the resulting balances from these transactions must be eliminated or appropriately adjusted during the preparation of the organization's consolidated financial statements. This chapter covers the following topics: 9/15 Intercompany and Intracompany Balancing ![]()
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