InterCompany and IntraCompay Relationship Oracle R12

Intercompany transaction means Internal transaction between two associated companies who file a consolidated tax return or financial statement or you can say transactions between two legal entities under same control or management of one LE having significant rights in decision making of another company. 
IntraCompany transactions are between to units or entities of same legal entity. We are going to see the suitable examples of both types of transactions.

Oracle R12 AGIS (intercompany solution) facilitates to capture both type of transactions.
Inter company transaction processing is determined by company structure and management where interCompany legally.

Division A pays the expenses of Division B of same company is suitable example of IntraCompany transaction.

Lets see how to fit this intra and inter company requirement is Oracle R12.

We are going to levrage same example of my previous post Multi-organization Structure.

  

As discussed in my previous post General Electricals is having its presence in three countries US, Italy and France with its corporate office in United States. There are two legal entities in each country. GE shares global chart of account for its global operations. France and Italy is sharing same Ledger, EU Primary Ledger since they are using same CoA, Calendar and currency and US uses US Primary ledger for its US Operations. I am not going in detail description of Multi-org.

If you observe, France is having divisional organization structure. Two legal entitles are divided in five division three under GE Ram Ele SA. and two under GE Jazz Ele SA. Divisional total of each legal entity representing the financial statement of Ram SA and Jazz SA.

Most of the Divisions pay each others expenses but management want to book it as IntraCompany transaction to determine accurate profitability of each division. e.g Most of the time Consulting chargers of Civil Ele Division and Domestic Ele Division is paid by Civil Ele Division all together and then they book proportionately to Domestic division as IntraCompany transactions.

As well as most of the time GE Ram Ele SA. and GE Jazz Ele SA pays each others expanses and legally they have too book these types of transaction as a intercompany transactions.

In above example you can define intracompany Balancing Rules for GE Ram Ele SA between

Between 61 and 62

Between 61 and 63

and for GE Jazz Ele SA

between 71 and 72

You can define Intercompany rule

Between 61 and 71

Between 61 and 72

Between 62 and 71

Between 62 and 72

Between 63 and 71

Between 63 and 72

After considering these examples lets see how to define these relationships in Oracle R12.

Define BSV’s

Continued