Apportionment between Companies – 113001

Document: Apportionment between Companies

Configuration of apportionment between companies using the following Offline Apportionment and Intercompany Apportionment routines. Warning: This is a suggestion for usage. The accounting entities and values are fictitious.

The procedure of apportionment between companies uses two resources from the Managerial Accounting environment:

·         Offline Apportionment
·         Intercompany

 Procedure

1.       Accounting definitions 

a.       Clearing ledger accounts must be defined for performing intercompany value transfer entries. Usually, these accounts are Active to the Transfer of Expenses and Passive to the Transfer of Revenue.
b.      Set an accounting entity (usually the accounting item, due to its application as a sub-account) for it to identify the companies/branches in the transfer accounts.

 2.       Apportionment configuration

a.       In the offline apportionment registration, a field exists for setting if the entries generated by that apportionment rule will be selected to be considered by the Intercompany routine.

3.       Intercompany Configuration

a.       An Intercompany rule must be built for each combination of SOURCE ACCOUNT + SOURCE CLEARING + SOURCE COMPANY/BRANCH > TARGET ACCOUNT + TARGET CLEARING + TARGET COMPANY/BRANCH

b.      Since no standard debit and credit reversal functionality exists between source and target, it is necessary that the target accounts are registered inverted, and therefore it is necessary that, for each source/target account, a clearing account exists.

 Example of use

 Need: To transfer part of the administrative expenses of the holding (salaries) to the companies controlled

 Structure: Holding 80 – Branch 01 / Company 01 – Branch 01 / Company 02 – Branch 01

 Step 1: Accounting Definitions

 ·         Clearing accounts:

Creation of account 1.05 – Transfer between companies (synthetic)

Creation of account 1.05.01 – Expense transfer (synthetic)

Creation of account 1.05.01.01 – Expenses with Salaries (analytic)

 ·         Accounting item for company/branch identification:

Creation of accounting item 01 – Company 01 (synthetic)

Creation of accounting item 01.01 – Company 01/Branch 01 (analytic)

Creation of accounting item 02 – Company 03 (synthetic)

Creation of accounting item 02.01 – Company 02/Branch 01 (analytic)

Creation of accounting item 80 – Holding 80 (synthetic)

Creation of accounting item 80.01 – Holding 80/Branch 01 (analytic)

Step 2: Apportionment configuration 

·         Configuration of the following apportionment rule in company 80 – Branch 01:

a.       Header:

Percentage basis: 100%

Type: Monthly Transaction

b.      Origin:

Account: 3.01.01.01 – Expenses with salaries

          c.       Line item:

Account: 3.01.01.01 – Expenses with salaries

d.      Counter-entry:
Row 001 > Account: 1.05.01.01 – Expenses with salaries/accounting item: 01.01 / Percentage: 40% / Intercompany: YES

Row 002 > Account: 1.05.01.01 – Expenses with salaries/accounting item: 02.01 / Percentage: 40% / Intercompany: YES

Row 003 > Account: 3.01.01.01* – Expenses with salaries/accounting item: 80.01 / Percentage: 20% / Intercompany: NO

*The percentage belonging to the Holding is not moved for the transfer between companies' accounts.
 

Step 3: Intercompany Configuration

·         Configuration of the following Intercompany rules in company 80/ branch 01:

a.      Rule 101:

Source company: 80

Branch (source): 01

Source account: 1.05.01.01

Source Accounting Item: 01.01

Target company: 01

Target branch: 01

Target account: 3.01.01.01*

Target Accounting Item: 08.01

b.      Rule 102:

Source company: 80

Branch (source): 01

Source account: 3.01.01.01

Source Accounting Item: (blank)

Target company: 01

Target branch: 01

Target account: 1.05.01.01*

Target Accounting Item: 08.01

c.       Rule 201:

Source company: 80

Branch (source): 01

Source account: 1.05.01.01

Source Accounting Item: 02.01

Target company: 02

Target branch: 01

Target account: 3.01.01.01 *

Target Accounting Item: 08.01

d.      Rule 201:

Source company: 80

Branch (source): 01

Source account: 3.01.01.01

Source Accounting Item: (blank)

Target company: 02

Target branch: 01

Target account: 1.05.01.01*

Target Accounting Item: 08.01  

*Note that the inversion occurs at registration, thus it is important that for each source/target account, a clearing account exists.
 

·         Comment: Ideally, an enhancement is performed in the Intercompany registration with the option Invert Entry on Target (Yes/No) to make the rule registration easier.

Step 4: Case study

a.       Balance in account 3.01.01.01 on 01.31.XX à 100,000.00

b.      Transactions generated by the apportionment rule:

Company 08/Branch 01: 

 
c.       Transactions generated by Intercompany

Company 01/Branch 01: 

 
Company 02/Branch 01: 

 
·         Comments: The clearing accounts 1.05.01.01 will only be zeroed out in a consolidated balance sheet, and separately evaluated company balance sheets must reflect transfer transactions.