Oracle Applications R12

Intracompany Accounting Setup

By TG Saravanan
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Intracompany Accounting

Intracompany balancing rules are used for creation of balancing lines on journals between balancing
segment values either within the same legal entity, or where there is no legal entity context.
Intracompany balancing rules are used when more than one balancing segment value exists on a transaction
or journal entry, as long as you have selected the Balance Intracompany Journals amounts for each
balancing segment value do not net to zero. These journals can be balanced automatically if you setup
balancing rules and enable the option to balance cross-entity journals. Intercompany balancing setup is not
covered in this document.

Setup
1. Intracompany Rules Setup in Ledger
Navigation: GL Responsibility Setup Financials Accounting Setup Manager Accounting Setups
If you have already created a ledger without intracompany balancing rules, then query the ledger and click
on Update Accounting Options icon.

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Click on Update icon against Intracompany Balancing Rules.

Click on Define Rules icon

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We should define intracompany balancing rules if we need to balance journals automatically. There should
be atleast one balancing rule and one accounting rule if automatic balancing is needed. This default
balancing rule should be defined for the journal source Other and journal category Other for the ledger
and legal entity. The default accounting rule on each balancing rule is defined for the debit balancing
segment value All Other and credit balancing segment value All Other.
With intracompany accounting, we can define both a debit (due from) and credit (due to) balancing segment,
which gives us more control over each balancing relationship. We can specify different debit and credit
accounts for each different intracompany trading partner, which is represented by a specific balancing
segment value.
All Other is also available as a balancing segment value if we want the balancing segment value to use the
same due to / due from accounts for every intracompany trading relationship that has not been specifically
defined.
If we set up a specific debit and credit balancing segment value, then the exact debit and credit accounts
are used. If we use All Other, the appropriate trading partner balancing segment value replaces the
balancing segment of the account combination.
Click on Create Rule to create a new balancing rule.

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Source Select the source from the LOV. If the balancing rule is applicable to all the source, then
select Other. We can define many rules with different sources and categories.
Category
Select appropriate Category from the LOV.
In case, if there are more than one balancing rule applicable for a transaction, then the following
precedence rule will be applied.
1. Specific Source and Specific Category
2. Specific Source and Other category
3. Other Source and Specific Category
4. Other Source and Other Category
We have defined only the generic balancing rule with source as Other and category as Other for the
demo purpose.
Accounting Rule
For each balancing rule, we need to define atleast one accounting rule.
Debit Balancing Segment Value
This is the company which will receive from the trading partner.
Credit Balancing Segment Value
This is the company which is payable to the trading partner.
Debit Account
This is the intracompany receivable account. If you have
intercompany segment in your chart of account, then enter
the credit balancing segment value in the intercompany
segment. I have defined the debit account as
11-000-000-141000-10001-12-000
Intracompany Receivable
Account
Trading Partner
company
Credit Account This is the intracompany Payable account. If you have intercompany segment in your chart
of account, then enter the debit balancing segment value in the intercompany segment.
Also define one generic accounting rule with debit and credit balancing segment value as All Other.
In case, if there are more than one accounting rule applicable for a transaction, then the following
precedence rule will be applied
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1.
2.
3.
4.

Specific Debit BSV and Specific Credit BSV

Specific Debit BSV and All Other Credit BSV
All Other Debit BSV and Specific Credit BSV
All Other Debit BSV and All Other Credit BSV

2. Create Payable Invoice

Navigation: Payables Responsibility Invoices Invoices
We will now create an invoice with unbalancing balancing segment values.

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The accounting entries are

Invoice Accounting Entries
Account Type
Account Combination
Expense
11-000-000-532300-10001-00-000
Expense
12-000-000-532300-10001-00-000
Expense
13-000-000-532300-10001-00-000
Expense
14-000-000-532300-10001-00-000
Liability
11-000-000-321100-10001-00-000

Debit Credit
20000
11000
12000
10000
53000

First segment is a balancing segment. Accounting entries are not tallied by balancing segment. Hence system
will look for intracompany balancing rules as all these balancing segments belong to one legal entity and
automatic intracompany balancing is enabled at the ledger. Create accounting for the invoice cannot be
done if automatic intracompany balancing is enabled for the ledger and no balancing rules are defined for
the ledger.

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During create accounting, system will create intracompany entries.

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In case of any errors during create accounting, errors can be viewed in the table
XLA_ACCOUNTING_ERRORS. Also refer Metalink note 604441.1

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