oracle apps r12

1. Intercompany Transactions
An Oracle White Paper
July 2005

2. Intercompany Transactions ii
Intercompany Transactions
EXECUTIVE SUMMARY............................................................................................................................................................3
INTRODUCTION.........................................................................................................................................................................3
INTERCOMPANY TRANSACTIONS.....................................................................................................................................4
Flow 1: External drop shipment from supplier to customer.................................................................................................... 7
Return in Flow 1: External drop shipment from supplier to customer.................................................................................. 9
Flow 1A: External drop shipment from supplier to customer with intermediate financial nodes...................................11
Return in Flow 1A: External drop shipment from supplier to customer with intermediate financial nodes.................13
Flow 1B: External Drop shipment from supplier with shipment and procurement financial flow ................................14
Flow 1B: Return: External Drop shipment from supplier with shipment and procurement financial flow..................17
Flow 2: Internal drop shipment from supplier (Global Procurement).................................................................................18
Return in Flow 2: Internal drop shipment from supplier (Global Procurement)...............................................................21
Flow 2A: Internal drop shipment from supplier with intermediate financial nodes (Global Procurement with
intermediate financial nodes)........................................................................................................................................................23
Return in Flow 2A: Internal drop shipment from supplier with intermediate financial nodes (Global Procurement
with intermediate financial nodes)...............................................................................................................................................25
Flow 2B: Internal drop shipment from supplier with intermediate financial nodes, using PO pricing option .............27
Flow 3: Internal drop shipment from supplier (Global Procurement) and Internal drop shipment to customer........29
Return in Flow 3: Internal drop shipment from supplier (Global Procurement) and Internal drop shipment to
customer ..........................................................................................................................................................................................31
Flow 3A: Internal drop shipment to customer (Expense Item in Customer facing organization)..................................33
Return Flow 3A: Internal drop shipment to customer (Expense Item in Customer facing organization).....................34
Flow 4: Global Procurement of Asset item in Expense destination with Accrue on Receipt..........................................35
Return in Flow 4: Global Procurement of Asset item in Expense destination with Accrue on Receipt........................37
Return in Flow 4A: Global Procurement of Expense item in Expense destination with Accrue on Receipt ...............40
Flow 5: Global Procurement of Expense item in Expense destination with Accrue on Receipt ....................................42
Return in Flow 5: Global Procurement of Expense item in Expense destination with Accrue on Receipt ..................43
Flow 6: Global Procurement of one time item in Expense destination with Accrue on Receipt....................................45
Return in Flow 6: Global Procurement of one time item in Expense destination with Accrue on Receipt..................46
Flow 7: Global Procurement of one time item in Expense destination with Accrue at Period End ..............................47
Return in Flow 7: Global Procurement of one time item in Expense destination with Accrue at Period End ............49
Flow 8: Global Procurement with Shop Floor destination of OSP item – OSP charges at PO price............................51
Return in Flow 8: Global Procurement with Shop Floor destination of OSP item – OSP charges at PO price.........52
Flow 9: Global Procurement with Shop Floor destination of OSP item – OSP charges at standard rate.....................53
Flow 9: Global Procurement with Shop Floor destination of OSP item – OSP charges at standard rate.....................53
Return in Flow 9: Global Procurement with Shop Floor destination of OSP item – OSP charges at standard rate...54
Flow 10: Global Procurement with Shop Floor destination of EAM direct item..............................................................55
Return in Flow 10: Global Procurement with Shop Floor destination of EAM direct item............................................56
CONCLUSION.............................................................................................................................................................................57
ADDITIONAL RESOURCES...................................................................................................................................................57

3. Intercompany Invoicing
EXECUTIVE SUMMARY
More and more companies are doing business globally, and taking advantage of the operations and tax benefits
that can be achieved by running operations throughout the world. These companies have multiple operating
units and organizations around the world. When goods are shipped or received, the financial ownership
through these organizations does not necessarily follow the physical movement of goods. Oracle Applications
support three main logistics needs of global organizations – Central Distribution, Central Procurement and
Drop Ship. This whitepaper details the intercompany transactions from an accounting perspective in Oracle
Applications as in 11.5.10.
INTRODUCTION
A corporation manages its global operations in various countries through a network of subsidiaries, separate
legal entities, licensees and several associated label franchisee. This complex network of operations is
necessitated to take care of local legal and fiscal environment, which prevail in each of those countries.
Following are few examples:
• In tele-communications industry, most of the countries stipulate mandatory domestic company partnership.
• Most of the steel and aluminum companies in Asia sell their entire output to another marketing company.
• Automobile industries are increasingly centralizing their sourcing activities globally to leverage their
combined volumes for a better price from their suppliers.
• Trading companies are setup in tax haven nations to take advantage of bilateral and multi-lateral trade
agreements to minimize the tax.
Consider the following two examples:
Example 1
Vision Operations (V1) is based in USA. It has a 100 % owned subsidiary company called Vision Asia (VA).
VA in turn has two subsidiaries – Vision Japan (VJ) and Vision China (VC). VJ has manufacturing facilities in
Osaka (O1) and distribution center at Tokyo (T1). Due to tax advantages, V1 sources all the goods from china
through VJ. Though the financial transactions between V1 and VC are routed through VJ, logistic movement
of goods takes place directly between V1 and VC.
Example 2
Continuing the above example, Vision Operations (V1) has another subsidiary company called Vision
Singapore (VS), 100 % that it owns. Individual plants procure components from their own suppliers. VS
centralizes all the commodity (like steel, Aluminum etc.,) procurement needs of Vision Operations across

4. Intercompany Transactions 4
world and procures the material on behalf of all VJ and its subsidiary plants and places purchase orders on its
suppliers. However, material is directly shipped from the suppliers to all the manufacturing plants.
Figure 1 - Organization Hierarchy Model
A key requirement for the global implementation of Oracle applications in such a complex business
environment is the ability to process "intercompany transactions," where one business unit invoices another for
transfer of goods and services. Often these intercompany transactions involve transactions related to general
expenses, funds transfer, salary transfers, asset transfers, royalty payments and product transfers. This paper
discusses only those intercompany transactions that are related to product transfers such as sales of goods and
internal procurement.
This paper provides setup steps, implementation tips, and guidance for coordinating the many departments,
which become involved with intercompany invoicing. We would be discussing implementation of
intercompany invoicing for the fictitious organization as depicted in Figure 1.
INTERCOMPANY TRANSACTIONS
This section briefly states the remaining business flows and their corresponding accounting transactions that are
possible in 11.5.10.
For each business flow,
1. The physical movement of goods and the corresponding financial flow is shown.
2. The accounting entries are then tabulated as below:
Time Transaction Description OU1 Accounting OU2 Accounting
Time indicates the sequence of events happening. Transaction indicates the physical event. Logical transactions are
in italics. Description gives the underlying transactions - physical/logical that are created. These drive accounting
entries. The next columns indicate the accounting entries for each operating unit. The process that would do the
accounting entries is also indicated – Cost processor, Inter-Company Invoicing, Receiving processor.
Box indicates that Transaction gets cost collected if organization is PJM enabled

5. Intercompany Transactions 5
Flows 1, 1A, 2, 2A and 3 are for asset items. Hence inventory accounts are used. Instead if they are expense
items, expense account will be used.
3. The reconciliation of accounting entries in previous table are tabulated as below:
OU1 Reconciliation OU2 Reconciliation
4. A return flow is done repeating steps 1, 2 and 3.

7. Intercompany Transactions 7
Flow 1: External drop shipment from supplier to customer
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in RC through
Receiving Desktop Form
RT: Receive in RC RI (Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
T2 Deliver into RC through
Receiving Desktop Form
RT: Deliver in RC
MMT: PO receipt in RC
(Accounting transaction)
(Logical PO receipt)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C shipment)
(Logical I/C receipt)
MMT: DC -> C1
(Accounting transaction)
(Cost processor)
Dr Inventory RC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
(Cost Processor)
Dr Inventory DC 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
(Cost Processor)
Dr COGS DC 15

8. Intercompany Transactions 8
(Logical SO Issue) Cr Inventory DC 15
(AR Invoice)
Dr Receivable DC 20
Cr Revenue DC 20
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr COGS DC 15
Dr Receivable DC 20
Cr Revenue DC 20
Cr I/C Payable 15
NOTE:
• If logical receipt is made in DC then the same accounting entries/transactions as in Flow 2 (in pages to come) will be generated.
• There is no cost re-average or PPV at the time of deliver or I/C transfer. This is because there was no physical receipt of goods

9. Intercompany Transactions 9
Return in Flow 1: External drop shipment from supplier to customer
Time Transaction Description OU1 Accounting OU2 Accounting
T1 RMA in RC MMT: RMA in RC
(No accounting)
MMT: RMA in DC
(Accounting
transaction)
(Logical RMA)
MMT: DC->RC
(Accounting
transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 12
Cr I/C COGS
12
(I/C Invoicing)
(Credit Memo)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr Inventory DC 15
Cr COGS
15
(Cost processor)
Dr I/C Accrual 15
Cr Inventory DC
15
(I/C Invoicing)
(Credit Memo)
Dr I/C Payable 15
Cr I/C Accrual
15
T2 AR Credit Memo (AR)
Dr Revenue DC 20
Cr Receivable DC 20
T3 Return to Receiving MMT: RC->RC RI (Cost processor)

10. Intercompany Transactions 10
(Inventory) Dr RI RC 10
Cr Inventory RC
10
T4 Return to Vendor
(Purchasing)
RT: Return to S1
(RC RI-> S1)
(Receiving processor)
Dr Accrual 10
Cr RI RC
10
OU1 Reconciliation OU2 Reconciliation
Dr Inventory 2
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 12
Cr I/C Receivable 15
Dr I/C Payable 15
Dr Revenue 20
Cr COGS 15
Cr Receivable 20
NOTE:
• RMA receipts are always physical receipts, with transaction cost as the item’s current cost
• There is no re-average or PPV at the time of RMA receipt
• Since current cost might have changed, the I/C COGS reversal may not completely nullify the expense that was originally incurred. This
however, is a limitation in the current architecture for Sales Order Shipments and will not be addressed in the context of this project
• However, to help customers, a cost hook will be provided for the RMA receipt transaction (NICE TO HAVE)

11. Intercompany Transactions 11
Flow 1A: External drop shipment from supplier to customer with intermediate financial nodes
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in PC through
Receiving Desktop Form
RT: Receive in PC (Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
T1 Deliver into PC through
Receiving Desktop Form
RT: Deliver in PC
MMT: PO receipt in PC
(Accounting
transaction)
(Logical PO receipt)
MMT: PC -> RC
(Accounting
transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue
15
(Cost processor)
Dr I/C COGS 10
Cr Inventory PC
10
(Cost Processor)
Dr Inventory RC 15
Cr I/C Accrual
15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable
15

12. Intercompany Transactions 12
MMT: RC -> DC
(Accounting
transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: DC -> C1
(Accounting
transaction)
(Logical SO Issue)
(I/C Invoicing)
Dr I/C Receivable 20
Cr I/C Revenue
20
(Cost processor)
Dr I/C COGS 15
Cr Inventory RC
15
(Cost Processor)
Dr Inventory DC 20
Cr I/C Accrual
20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable
20
(Cost Processor)
Dr COGS DC 20
Cr Inventory DC
20
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr I/C Receivable 20
Dr I/C COGS 15
Cr I/C Revenue 20
Cr I/C Payable 15
Dr COGS DC 20
Dr Receivable DC 25
Cr Revenue DC 25
Cr I/C Payable
20
NOTE:
• There is no cost re-average or PPV at the time of deliver or I/C transfer. This is because there was no physical receipt of goods

13. Intercompany Transactions 13
Return in Flow 1A: External drop shipment from supplier to customer with intermediate financial nodes
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price
PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: PC
Order
OU: OU3
Ship from: PC
12$
Current cost
Shipping Txn Flow: OU1->OU2->OU3
Procuring Txn Flow: None
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 RMA in PC MMT: RMA in PC
(No accounting)
MMT: RMA in DC
(Accounting transaction)
(Logical RMA)
MMT: DC->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: RC->PC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory PC 12
Cr I/C COGS 12
(I/C Invoicing)
(Cost processor)
Dr Inventory RC 15
Cr I/C COGS 15
(I/C Invoicing)
(Credit Memo)
Dr I/C Revenue 20
Cr I/C Receivable 20
(Cost processor)
Dr I/C Accrual 15
Cr Inventory RC 15
(I/C Invoicing)
(Cost processor)
Dr Inventory DC 20
Cr COGS 20
(Cost processor)
Dr I/C Accrual 20
Cr Inventory DC 20
(I/C Invoicing)
(Credit Memo)
Dr I/C Payable 20
Cr I/C Accrual 20

14. Intercompany Transactions 14
Dr I/C Revenue 15
Cr I/C Receivable 15
Dr I/C Payable 15
Cr I/C Accrual 15
T2 AR Credit Memo (AR)
Dr Revenue DC 25
Cr Receivable DC 25
T3 Return to Receiving
(Inventory)
MMT: PC->PC RI (Cost processor)
Dr RI PC 10
Cr Inventory PC 10
T4 Return to Vendor
(Purchasing)
RT: Return to S1
(PC RI->S1)
(Receiving processor)
Dr Accrual 10
Cr RI PC 10
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr Inventory 2
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 12
Cr I/C Receivable 15
Dr I/C Payable 15
Dr Revenue 20
Cr COGS 15
Cr Receivable 20
Dr I/C Payable 20
Dr Revenue 25
Cr COGS 20
Cr Receivable 25
NOTE:
• RMA receipts are always physical receipts, with transaction cost as the item’s current cost
• There is no re-average or PPV at the time of RMA receipt
• Since current cost might have changed, the I/C COGS reversal may not completely nullify the expense that was originally incurred. This however, is a
limitation in the current architecture for Sales Order Shipments and will not be addressed in the context of this project
• However, to help customers, a cost hook will be provided for the RMA receipt transaction (NICE TO HAVE)
Flow 1B: External Drop shipment from supplier with shipment and procurement financial flow

15. Intercompany Transactions 15
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in RC RT: Receive in RC
MMT: PO receipt in PC
(Accounting transaction)
(Logical PO receipt)
MMT: PC -> RC RI
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Inventory PC 10
(Receiving Processor)
Dr OU2 Clearing 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
T2
T2 >= T1
Deliver into RC
RT: Deliver in RC
MMT: Logical PO Receipt in RC
MMT: RC -> DC
(Accounting transaction)
Cost Processor
Dr Inventory RC 15
Cr. OU2 Clearing 15
I/C Invoicing)
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: RC
Order
OU: OU3
Ship from: RC
Asset Item
Inv. dest
Asset Item
Inv. dest
Asset Item
Accrue rcpt
Logical
Receiptt

16. Intercompany Transactions 16
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: DC -> C1
(Accounting transaction)
(Logical SO Issue)
Dr I/C Receivable 20
Cr I/C Revenue 20
(Cost processor)
Dr I/C COGS 15
Cr Inventory RC 15
(Cost Processor)
Dr Inventory DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20
(Cost Processor)
Dr COGS DC 20
Cr Inventory DC 20
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr I/C Receivable 20
Dr I/C COGS 15
Cr I/C Revenue 20
Cr I/C Payable 15
Dr COGS DC 20
Dr Receivable DC 25
Cr Revenue DC 25
Cr I/C Payable 20

17. Intercompany Transactions 17
Flow 1B: Return: External Drop shipment from supplier with shipment and procurement financial flow
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 RMA in PC MMT: RMA in RC
(No accounting)
MMT: RMA in DC
(Accounting transaction)
(Logical RMA)
MMT: DC->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 12
Cr I/C COGS 12
(I/C Invoicing)
(Credit Memo)
Dr I/C Revenue 20
Cr I/C Receivable 20
(Cost processor)
Dr Inventory PC 20
Cr COGS 20
(Cost processor)
Dr I/C Accrual 20
Cr Inventory PC 20
(I/C Invoicing)
(Credit Memo)
Dr I/C Payable 20
Cr I/C Accrual 20
T2 AR Credit Memo (AR)
Dr Revenue PC 25
Cr Receivable PC 25
T3 Return to Receiving
(Inventory)
MMT: RC->RC RI (Cost processor)
Dr RI RC 15
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: RC
Order
OU: OU3
Ship from: RC
Current cost $12
Asset Item
Inv. dest
Asset Item
Accrue rcpt

18. Intercompany Transactions 18
Cr Inventory RC 15
T4 Return to Vendor
(Purchasing)
RT: Return RC RI to S1
MMT: RC RI ->PC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: PC->PC RI (Accounting
transaction)
(Logical RTV)
RAE: Return PC RI to S1 (Accounting
transaction) (Logical RTV)
(Cost processor)
Dr Inventory PC 10
Cr I/C COGS 10
(I/C Invoicing)
(Credit memo)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory PC 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
(Receiving Processor)
Dr I/C Accrual 15
Cr RI DC 15
(I/C Invoicing)
(Credit memo)
Dr I/C Payable 15
Cr I/C Accrual 15
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Revenue 20
Dr I/C Payable 15
Cr Inventory 3
Cr I/C COGS 12
Cr I/C Receivable 20
Dr Revenue 25
Dr I/C Payable 20
Cr Receivable 25
Cr COGS 20
Flow 2: Internal drop shipment from supplier (Global Procurement)

19. Intercompany Transactions 19
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Price list
PO
OU: OU1
Ship to: DC
Order
OU: OU2
Ship from: DC
Asset Item
Inv. dest
Asset Item
Accrue rcpt
Shipping Txn Flow: None
Procuring Txn Flow: OU1->OU2
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in RC
(Accounting transaction)
(Logical PO receipt)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory RC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
(Receiving Processor)
Dr RI DC 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
T2
T2 >= T1
Deliver into DC RT: Deliver in DC
MMT: PO Receipt in DC
(Regular transaction)
(Cost Processor)
Dr Inventory DC 15
Cr RI DC 15
T3 Ship from DC to C1 MMT: DC->C1
(Regular transaction)
(Cost Processor)
Dr COGS DC 15

20. Intercompany Transactions 20
Cr Inventory DC 15
(AR Invoice)
Dr Receivable DC 20
Cr Revenue DC 20
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr COGS DC 15
Dr Receivable DC 20
Cr Revenue DC 20
Cr I/C Payable 15
NOTE:
• The physical PO receipt transaction in DC will be used to re-average the inventory cost, or reflect PPV, as appropriate
• The PO receipt maybe at the Purchase Order price or the Transfer Price, based on the pricing option setup in the transaction flow.
• This transaction however, is not accounted for, or cost collected. The transaction is costed, when the associated accounting transactions have
distributions.

21. Intercompany Transactions 21
Return in Flow 2: Internal drop shipment from supplier (Global Procurement)
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Price list
PO
OU: OU1
Ship to: DC
Order
OU: OU2
Ship from: DC
14$
Current
cost
Shipping Txn Flow: None
Procuring Txn Flow: OU1->OU2
Time Transaction Description OU1 Accounting OU2 Accounting
T1 RMA in DC MMT: RMA in DC
(Regular transaction)
(Cost Processor)
Dr Inventory DC 14
Cr COGS DC 14
T2 AR Credit Memo (AR)
Dr Revenue DC 20
Cr Receivable DC 20
T3 Return to receiving
(Inventory)
MMT: DC->RI DC
(Regular transaction)
(Cost processor)
Dr RI DC 15
Cr Inventory DC 15
T4 Return to vendor
(Purchasing)
RT: Return DC RI to S1
MMT: DC RI ->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 10
Cr I/C COGS
10
(I/C Invoicing)
(Credit memo)
Dr I/C Revenue
(Receiving Processor)
Dr I/C Accrual 15
Cr RI DC 15
(I/C Invoicing)
(Credit memo)
Dr I/C Payable 15
Cr I/C Accrual 15

22. Intercompany Transactions 22
MMT: RC->RC RI (Accounting transaction)
(Logical RTV)
RT: Return RC RI to S1
(Accounting transaction)
(Logical RTV)
15
Cr I/C Receivable
15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory RC
10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing
10
OU1 Reconciliation OU2 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Payable 15
Dr Revenue 20
Cr COGS 14
Cr Receivable 20
Cr Inventory 1
NOTE:
• RMA receipt is a physical receipt at the item’s current cost. Hence I/C COGS may not be completely reversed
• The RTV transaction will reverse accruals at the PO price. However, I/C accounting may not be completely reversed, since transfer price
could have changed in the interim
• The user will need to post manual journal entries as appropriate to remove I/C profits while consolidating at the enterprise level

23. Intercompany Transactions 23
Flow 2A: Internal drop shipment from supplier with intermediate financial nodes (Global Procurement with intermediate financial nodes)
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: DC
Order
OU: OU3
Ship from: DC
Asset Item
Inv. dest
Asset Item
Inv. dest
Asset Item
Accrue rcpt
Shipping Txn Flow: None
Procuring Txn Flow: OU1->OU2->OU3
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in PC
(Accounting transaction)
(Logical PO Receipt)
MMT: PC -> RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
(Receiving Processor)
Dr OU2 Clearing 15
Cr I/C Accrual 15
(Cost Processor)
Dr Inventory RC 15
Cr OU2 Clearing 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
(Receiving Processor)
Dr RI DC 20
Cr I/C Accrual 20

24. Intercompany Transactions 24
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(I/C Invoicing)
Dr I/C Receivable 20
Cr I/C Revenue 20
(Cost processor)
Dr I/C COGS 15
Cr Inventory RC 15
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20
T2
T2 >= T1
Deliver into DC RT: Deliver in DC
MMT: PO Receipt in DC
(Regular transaction)
Cost Processor)
Dr Inventory DC 20
Cr RI DC 20
T3 Ship from DC to C1 MMT: DC->C1
(Regular transaction)
(Cost Processor)
Dr COGS DC 20
Cr Inventory DC 20
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr I/C Receivable 20
Dr I/C COGS 15
Cr I/C Revenue 20
Cr I/C Payable 15
Dr COGS DC 20
Dr Receivable DC 25
Cr Revenue DC 25
Cr I/C Payable 20
NOTE:
• The physical PO receipt transaction in DC will be used to re-average the inventory cost, or reflect PPV, as appropriate
• The PO receipt maybe at the Purchase Order price or the Transfer Price, based on the pricing option setup in the transaction flow.
• This transaction however, is not accounted for, or cost collected. The transaction is costed, when the associated accounting transactions have
distributions

25. Intercompany Transactions 25
Return in Flow 2A: Internal drop shipment from supplier with intermediate financial nodes (Global Procurement with intermediate financial nodes)
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: DC
Order
OU: OU3
Ship from: DC
19$
Current cost
Shipping Txn Flow: None
Procuring Txn Flow: OU1->OU2->OU3
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 RMA in DC MMT: RMA in DC
(Regular transaction)
(Cost Processor)
Dr Inventory DC 19
Cr COGS DC 19
T2 AR Credit Memo (AR)
Dr Revenue DC 25
Cr Receivable DC 25
T3
T3
>
T1
Return to receiving
(Inventory)
MMT: DC->RI DC
(Regular transaction)
(Cost processor)
Dr RI DC 20
Cr Inventory DC 20
T4
T4
>
T3
Return to vendor
(Purchasing)
RT: Return DC RI to S1
MMT: DC RI ->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 15
Cr I/C COGS 15
(I/C Invoicing)
(Credit Memo)
Dr I/C Revenue 20
(Receiving Processor)
Dr I/C Accrual 20
Cr RI DC 20
(I/C Invoicing)

26. Intercompany Transactions 26
MMT: RC->PC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: PC->PC RI
(Accounting transaction)
(Logical RTV)
RT: Return PC RI to S1
(Accounting transaction)
(Logical RTV)
(Cost processor)
Dr Inventory PC 10
Cr I/C COGS 10
(I/C Invoicing)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory PC 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
Cr I/C Receivable 20
(Cost Processor)
Dr OU2 clearing 15
Cr Inventory RC 15
(I/C Invoicing)
Dr I/C Payable 15
Cr I/C Accrual 15
(Receiving Processor)
Dr. I/C Accrual 15
Cr. OU2 clearing 15
(Credit Memo)
Dr I/C Payable 20
Cr I/C Accrual 20
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Revenue 20
Dr I/C Payable 15
Cr I/C COGS 15
Cr I/C Receivable 20
Dr I/C Payable 20
Dr Revenue 25
Cr COGS 19
Cr Receivable 25
Cr Inventory 1
NOTE:
• RMA receipt is a physical receipt at the item’s current cost. Hence I/C COGS may not be completely reversed
• The RTV transaction will reverse accruals at the PO price. However, I/C accounting may not be completely reversed, since transfer price
could have changed in the interim
• The user will need to post manual journal entries as appropriate to remove I/C profits while consolidating at the enterprise level

27. Intercompany Transactions 27
Flow 2B: Internal drop shipment from supplier with intermediate financial nodes, using PO pricing option
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in PC
(Accounting transaction)
MMT: PC -> RC
(Accounting transaction)
MMT: RC -> DC
(Accounting transaction)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
(Receiving Processor)
Dr OU2 Clearing 10
Cr I/C Accrual 10
(Cost Processor)
Dr Inventory RC 10
Cr OU2 Clearing 10
(I/C Invoicing)
Dr I/C Accrual 10
Cr I/C Payable 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
(Receiving Processor)
Dr RI DC 10
Cr I/C Accrual 10
(I/C Invoicing)
Dr I/C Accrual 10
Cr I/C Payable 10

28. Intercompany Transactions 28
T2
T2 >=
T1
Deliver into DC RT: Deliver in DC
MMT: PO Receipt in DC
(Regular transaction)
Cost Processor)
Dr Inventory DC 10
Cr RI DC 10
T3 Ship from DC to C1 MMT: DC->C1
(Regular transaction)
(Cost Processor)
Dr COGS DC 10
Cr Inventory DC 10
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 10
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 10
Dr I/C Receivable 10
Dr I/C COGS 10
Cr I/C Revenue 10
Cr I/C Payable 10
Dr COGS DC 10
Dr Receivable DC 25
Cr Revenue DC 25
Cr I/C Payable 10
NOTE:
• When the transaction flow is set-up to use PO price, the financial transaction accounting ignores any transfer price that might be available for the
item.
• Return in Flow 2B is similar to that in Flow 2A.
• Cost collection for Flow 2B is similar to that in Flow 2A

29. Intercompany Transactions 29
Flow 3: Internal drop shipment from supplier (Global Procurement) and Internal drop shipment to customer
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: RC
Order
OU: OU3
Ship from: RC
Asset Item
Inv. dest
Asset Item
Inv. dest
Asset Item
Accrue rcpt
Shipping Txn Flow: OU2->OU3
Procuring Txn Flow: OU1->OU2
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in RC RT: Receive in RC
MMT: PO receipt in PC
(Accounting transaction)
(Logical PO receipt)
MMT: PC -> RC RI
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Inventory PC 10
(Receiving Processor)
Dr RI RC 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
T2
T2 >= T1
Deliver into RC RT: Deliver in RC
MMT: PO Receipt in RC
(Regular transaction)
(Cost Processor)
Dr Inventory RC 15

30. Intercompany Transactions 30
Cr RI RC 15
T3 Ship from RC to C1 MMT: RC->C1
(No accounting)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: DC -> C1
(Accounting transaction)
(Logical SO Issue)
I/C Invoicing)
Dr I/C Receivable 20
Cr I/C Revenue 20
(Cost processor)
Dr I/C COGS 15
Cr Inventory RC 15
(Cost Processor)
Dr Inventory DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20
(Cost Processor)
Dr COGS DC 20
Cr Inventory DC 20
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr I/C Revenue 15
Cr Accrual 10
Dr I/C Receivable 20
Dr I/C COGS 15
Cr I/C Payable 15
Cr I/C Revenue 20
Dr Receivable 25
Dr COGS 20
Cr Revenue 25
Cr I/C Payable 20

31. Intercompany Transactions 31
Return in Flow 3: Internal drop shipment from supplier (Global Procurement) and Internal drop shipment to customer
DC
SOB3/LE3/
OU3
RC
SOB2/LE2/
OU2
C1 S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
20$
Transfer
price PC
SOB1/LE1/
OU1
25$
Price list
PO
OU: OU1
Ship to: RC
Order
OU: OU3
Ship from: RC
19$
Current cost
14$
Current cost
Shipping Txn Flow: OU2->OU3
Procuring Txn Flow: OU1->OU2
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 RMA in RC MMT: RMA in RC
(No transaction)
MMT: RMA in DC
(Accounting transaction)
(Logical RMA)
MMT: DC->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 14
Cr I/C COGS 14
(I/C Invoicing)
(Credit memo)
Dr I/C Revenue 20
Cr I/C Receivable 20
(Cost processor)
Dr Inventory DC 20
Cr COGS 20
(Cost processor)
Dr I/C Accrual 20
Cr Inventory DC 20
(I/C Invoicing)
(Credit memo)
Dr I/C Payable 20
Cr I/C Accrual 20
T2 AR Credit Memo (AR)
Dr Revenue DC 25
Cr Receivable DC 25
T3 Return to receiving
(Inventory)
MMT: RC->RC RI
(Regular transaction)
(Cost processor)
Dr RI RC 15
Cr Inventory RC 15
T4 Return to vendor RT: Return RC RI to S1 (Receiving Processor)

32. Intercompany Transactions 32
(Purchasing) (No accounting)
MMT: RC RI ->PC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: PC->PC RI (Accounting transaction)
(Logical RTV)
RT: Return PC RI to S1
(Accounting transaction)
(Logical RTV)
(Cost processor)
Dr Inventory PC 10
Cr I/C COGS
10
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory PC 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
Dr I/C Accrual 15
Cr RI RC 15
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Payable 15
Cr I/C Accrual 15
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Revenue 20
Dr I/C Payable 15
Cr Inventory 1
Cr I/C COGS 14
Cr I/C Receivable 20
Dr Revenue 25
Dr I/C Payable 20
Cr Receivable 25
Cr COGS 20

33. Intercompany Transactions 33
Flow 3A: Internal drop shipment to customer (Expense Item in Customer facing organization)
DC
SOB3/LE3/
OU2
RC
SOB2/LE2/
OU1
C1
Financial Flow
Physical Flow
20$
Transfer
price
25$
Price list
Ship to: RC
Order
OU: OU3
Ship from: RC
Asset Item
Current cost $14
Expense Item
Inv. dest
Shipping Txn Flow: OU2->OU3
Time Transaction Description OU1 Accounting OU2Accounting
T1 Ship from RC to C1 MMT: RC->C1
(No accounting)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: DC -> C1
(Accounting transaction)
(Logical SO Issue)
No Accounting
I/C Invoicing)
Dr I/C Receivable 20
Cr I/C Revenue 20
(Cost processor)
Dr I/C COGS 14
Cr Inventory RC 14
(Cost Processor)
Dr Expense DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20
(AR)
Dr Revenue DC 25
Cr Receivable DC 25
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 20
Dr I/C COGS 14
Cr Inventory 14
Cr I/C Revenue 20
Dr Expense DC 20
Dr Revenue DC 25
Cr Receivable DC 25 Cr I/C Payable 20

34. Intercompany Transactions 34
Return Flow 3A: Internal drop shipment to customer (Expense Item in Customer facing organization)
DC
SOB3/LE3/
OU2
RC
SOB2/LE2/
OU1
C1
Financial Flow
Physical Flow
20$
Transfer
price
25$
Price list
Ship to: RC
Order
OU: OU3
Ship from: RC
Asset Item
Current cost $14
Expense Item
Inv. dest
Shipping Txn Flow: OU2->OU3
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Ship from RC to C1 MMT: RMA in RC
(No accounting)
MMT: RMA in DC
(Accounting transaction)
(Logical RMA)
MMT: DC->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Inventory RC 14
Cr I/C COGS 14
(I/C Invoicing)
(Credit memo)
Dr I/C Revenue 20
Cr I/C Receivable 20
(Cost Processor)
Dr I/C Accrual 20
Cr Expense 20
(I/C Invoicing)
(Credit memo)
Dr I/C Payable 20
Cr I/C Accrual 20
(AR Invoice)
Dr Receivable DC 25
Cr Revenue DC 25

35. Intercompany Transactions 35
OU1 Reconciliation OU2 Reconciliation
Dr Inventory 14
Dr I/C Revenue 20
Cr I/C COGS 14
Cr I/C Receivable 20
Dr I/C Payable 20
Dr Receivable 25
Cr Revenue 25
Cr Expense 20
Flow 4: Global Procurement of Asset item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in RC
(Accounting transaction)
(Logical PO Receipt)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Inventory RC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Receiving Processor)
Dr RI DC 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
DC RI
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Asset Item
Accrue rcpt
Expense Item
Expense dest.
Procuring Txn Flow: OU1->OU2

36. Intercompany Transactions 36
(Cost processor)
Dr I/C COGS 10
Cr Inventory RC 10
T2
T2 >= T1
Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge Acct DC 15
Cr RI DC 15
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr ChargeAcct DC 15
Cr I/C Payable 15
NOTE:
• The destination type on the purchase order should not impact the accrual methodology in the procurement operating unit.
• Consequently, global procurement of inventory items, will be routed through the inventory account of the procurement organization
• Therefore, the supplier accrual on the procurement operating unit will always be accrue at receipt
• If the PO distribution for the destination organization, has a project tied to it, the accounting will default to PO price

37. Intercompany Transactions 37
Return in Flow 4: Global Procurement of Asset item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving
(Purchasing)
DC->RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 15
Cr Charge DC 15
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
MMT: DC RI ->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: RC->RC RI (Accounting transaction)
(Logical RTV)
RT: Return RC RI to S1
(Accounting transaction)
(Cost processor)
Dr Inventory RC 10
Cr I/C COGS 10
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory RC 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
(Receiving Processor)
Dr I/C Accrual 15
Cr RI DC 15
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Payable 15
Cr I/C Accrual 15
DC RI
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Asset Item
Accrue rcpt
Expense Item
Expense dest.
Procuring Txn Flow: OU1->OU2

38. Intercompany Transactions 38
OU1 Reconciliation OU2 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Payable 15
Cr Charge DC 15

39. Intercompany Transactions 39
low 4A: Global Procurement of Expense item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in RC
(Accounting transaction)
(Logical PO Receipt)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Expense 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Expense 10
(Receiving Processor)
Dr RI DC 15
Cr I/C Accrual 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
T2
T2 >= T1
Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge Acct DC 15
Cr RI DC 15
DC RI
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Expense Item
Accrue rcpt
Expense Item
Expense dest.
Procuring Txn Flow: OU1->OU2

40. Intercompany Transactions 40
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr ChargeAcct DC 15
Cr I/C Payable 15
NOTE:
• Since item is expense, it will be routed through the item/organization expense account in the procurement organization
• If the PO distribution for the destination organization, has a project tied to it, the accounting will default to PO price
Return in Flow 4A: Global Procurement of Expense item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving
(Purchasing)
DC->RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 15
Cr Charge DC 15
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
(No accounting)
MMT: DC RI ->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
(Cost processor)
Dr Expense 10
Cr I/C COGS 10
(I/C Invoicing)
(I/C Credit memo)
(Receiving Processor)
Dr I/C Accrual 15
Cr RI DC 15
(I/C Invoicing)
(I/C Credit memo)
DC RI
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Expense Item
Accrue rcpt
Expense Item
Expense dest.
Procuring Txn Flow: OU1->OU2

41. Intercompany Transactions 41
MMT: RC->RC RI (Accounting transaction)
(Logical RTV)
RT: Return RC RI to S1
(Accounting transaction)
(Logical RTV)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Expense 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
Dr I/C Payable 15
Cr I/C Accrual 15
OU1 Reconciliation OU2 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Payable 15
Cr Charge DC 15

42. Intercompany Transactions 42
Flow 5: Global Procurement of Expense item in Expense destination with Accrue on Receipt
DC RI
SOB3/LE3/
OU3
PC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Expense Item
Accrue rcpt
Expense Item
Expense dest.
RC
SOB2/LE2/
OU2
20$
Transfer
price
Asset Item
Procuring Txn Flow: OU1->OU2->OU3
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Receipt in DC RT: Receive in DC
MMT: PO receipt in PC
(Accounting transaction)
(Logical PO Receipt)
MMT: PC -> RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: RC -> DC
(Accounting transaction)
(Logical I/C Shipment)
(Receiving Processor)
Dr OU1 Clearing 10
Cr Accrual 10
(Cost processor)
Dr Expense PC 10
Cr OU1 Clearing 10
(I/C Invoicing)
Dr I/C Receivable 15
Cr I/C Revenue 15
(Cost processor)
Dr I/C COGS 10
Cr Expense PC 10
(Receiving Processor)
Dr OU2 Clearing 15
Cr I/C Accrual 15
(Cost Processor)
Dr Inventory RC 15
Cr OU2 Clearing 15
(I/C Invoicing)
Dr I/C Accrual 15
Cr I/C Payable 15
(I/C Invoicing)
Dr I/C Receivable 20
Cr I/C Revenue 20
(Receiving Processor)
Dr RI DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20

43. Intercompany Transactions 43
(Cost processor)
Dr I/C COGS 15
Cr Inventory RC 15
T2
T2 >= T1
Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge DC 20
Cr RI DC 20
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Receivable 15
Dr I/C COGS 10
Cr Accrual 10
Cr I/C Revenue 15
Dr I/C Receivable 20
Dr I/C COGS 15
Cr I/C Revenue 20
Cr I/C Payable 15
Dr Charge DC 20
Cr I/C Payable 20
Return in Flow 5: Global Procurement of Expense item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting OU3 Accounting
T1 Return to receiving
(Purchasing)
DC->RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 20
Cr Charge DC 20
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1 (Receiving Processor)
Dr I/C Accrual 20
Cr RI DC 20
DC RI
SOB3/LE3/
OU3
PC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
15$
Transfer
price
PO
OU: OU1
Ship to: DC
EXP
Expense Item
Accrue rcpt
Expense Item
Expense dest.
RC
SOB2/LE2/
OU2
20$
Transfer
price
Asset Item
Procuring Txn Flow: OU1->OU2->OU3

44. Intercompany Transactions 44
MMT: DC RI ->RC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: RC->PC
(Accounting transaction)
(Logical I/C Shipment)
(Logical I/C Receipt)
MMT: PC->PC RI
(Accounting transaction)
(Logical RTV)
RT: Return PC RI to S1
(Accounting transaction)
(Logical RTV)
(Cost processor)
Dr Inventory PC 10
Cr I/C COGS 10
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Revenue 15
Cr I/C Receivable 15
(Cost processor)
Dr OU1 clearing 10
Cr Inventory PC 10
(Receiving Processor)
Dr Accrual 10
Cr OU1 clearing 10
(Cost processor)
Dr Inventory RC 15
Cr I/C COGS 15
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Revenue 20
Cr I/C Receivable 20
(Cost Processor)
Dr OU2 clearing 15
Cr Inventory RC 15
Receiving Processor
Dr. I/C Accrual 15
Cr. OU2 clearing 15
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Payable 15
Cr I/C Accrual 15
(I/C Invoicing)
(I/C Credit memo)
Dr I/C Payable 20
Cr I/C Accrual 20
OU1 Reconciliation OU2 Reconciliation OU3 Reconciliation
Dr I/C Revenue 15
Dr Accrual 10
Cr I/C COGS 10
Cr I/C Receivable 15
Dr I/C Revenue 20
Dr I/C Payable 15
Cr I/C COGS 15
Cr I/C Receivable 20
Dr I/C Payable 20
Cr Charge 20

45. Intercompany Transactions 45
Flow 6: Global Procurement of one time item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
(Receiving Processor)
Dr I/C Cost of Sales 10
Cr Accrual 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Receiving Processor)
Dr RI DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr I/C Accrual 20
Cr I/C Payable 20
T2 Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge Acct. DC 20
Cr RI DC 20
T3 Supplier Invoice for 11 British Pounds Match invoice to rcpt Dr. Accrual 10
Dr. IPV 1
Cr. Liability 11
OU1 Reconciliation OU2 Reconciliation
Dr I/C Cost of Sale 10
Dr. I/C Receivable 10
Dr. IPV 1
Cr. I/C Revenue 10
Cr. Liability 11
Dr. Charge 20
Cr. I/C Payable 20
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10£
PO price
20$
PO price
PO
OU: OU1
Ship to: DC
One time Item
Expense dest.
One time item
accrue receipt
EXP
Procuring Txn Flow: OU1->OU2

46. Intercompany Transactions 46
Return in Flow 6: Global Procurement of one time item in Expense destination with Accrue on Receipt
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving
(Inventory)
DC RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 20
Cr Charge acct. DC 20
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
(No accounting)
DC RI RC
(Accounting transaction)
(Receiving Processor)
Dr Accrual 10
Cr I/C Cost of Sales 10
(I/C Invoicing)
Dr I/C Revenue 10
Cr I/C Receivable 10
(Receiving Processor)
Dr I/C Accrual 20
Cr RI DC 20
(I/C Invoicing)
Dr I/C Payable 20
Cr I/C Accrual 20
T3 Credit Memo Supplier sends credit memo Dr Liability 11
Cr IPV 1
Cr Accrual 10
OU1 Reconciliation OU2 Reconciliation
Dr Liability 11
Dr. I/C Revenue 10
Cr. IPV 1
Cr. I/C Receivable 10
Cr. I/C Cost of Sales 10
Dr. I/C Payable 20
Cr. Charge 20
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10£
PO price
20$
PO price
One time Item
Expense dest.
One time item
accrue receipt
EXP
Procuring Txn Flow: OU1->OU2

47. Intercompany Transactions 47
Flow 7: Global Procurement of one time item in Expense destination with Accrue at Period End
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
No Accounting
(I/C Invoicing)
Dr. I/C Receivables 10
Cr. I/C Revenue 10
(Receiving Processor)
Dr RI DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr. I/C Accrual 20
Cr. I/C Payables 20
T2 Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge Acct. DC 20
Cr RI DC 20
T3 Period End Accruals Dr. I/C Cost of Sales 10
Cr. Accrual 10
T4 Reopen next period Open Purchasing Period Dr. Accrual 10
Cr. I/C Cost of Sales 10
T5 Supplier Invoice for 11 British Pounds Match invoice to rcpt Dr. I/C Cost of Sales 11
Cr. Liability 11
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10£
PO price
20$
PO price
PO
OU: OU1
Ship to: DC
One time Item
Expense dest.
One time item
accrue per end
EXP
Procuring Txn Flow: OU1->OU2

48. Intercompany Transactions 48
OU1 Reconciliation OU2 Reconciliation
Dr I/C Receivable 10
Dr. I/C Cost of Sales 11
Cr. I/C Revenue 10
Cr. Liability 1
Dr. Charge 20
Cr. I/C Payable 20
NOTE:
• IPV is not adjusted on the I/C invoice

49. Intercompany Transactions 49
Return in Flow 7: Global Procurement of one time item in Expense destination with Accrue at Period End
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
No Accounting
(I/C Invoicing)
Dr. I/C Receivables 10
Cr. I/C Revenue 10
(Receiving Processor)
Dr RI DC 20
Cr I/C Accrual 20
(I/C Invoicing)
Dr. I/C Accrual 20
Cr. I/C Payables 20
T2 Deliver into DC RT: Deliver in DC (Receiving Processor)
Dr Charge Acct. DC 20
Cr RI DC 20
T3 Return to RI DC RT: Return to RI in DC (Receiving Processor
Dr. RI DC 20
Cr. Charge Acct DC 20
T4 Return from RI DC to S1 RT: Return to Vendor
DC RC (I/C Invoicing)
Dr. I/C Revenue 10
Cr. I/C Receivable 10
(Receiving Processor)
Dr. I/C Accrual 20
Cr. RI DC 20
(I/C Invoicing)
Dr. I/C Payables 20
Cr. I/C Accrual 20
T4 Period End Accruals No Accounting since net quantity received is 0
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10£
PO price
20$
PO price
One time Item
Expense dest.
One time item
accrue per end
EXP
Procuring Txn Flow: OU1->OU2

50. Intercompany Transactions 50
T5 Reopen next period Open Purchasing Period No Accounting
NOTE:
• Net Accounting is nil, since the net quantity received is zero
• In case of 2 way match, it is not essential to have a receipt at the time of invoicing. The receipt may never occur as well
• At the time of invoice, an inter-company event will be generated in the receiving accounting events table, so that inter-company accounting can take
place. A reverse event needs to be created when a credit memo is received against the invoice
• I/C accounting will be a pure charge back for one-time items. The I/C cost of sales at PO price will be offset by the I/C Revenue, also at PO price,
thereby ensuring that there is no recognition of I/C profit

51. Intercompany Transactions 51
Flow 8: Global Procurement with Shop Floor destination of OSP item – OSP charges at PO price
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
10$
PO price
PO
OU: OU1
Ship to: DC
OSP Item
Shop Fl. dest.
any item type
Shop
Floor
Procuring Txn Flow: OU1->OU2
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
(Receiving Processor)
Dr I/C Cost of Sales 10
Cr Accrual 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Receiving Processor)
Dr RI DC 10
Cr I/C Accrual 10
(I/C Invoicing)
Dr I/C Accrual 10
Cr I/C Payable 10
T2 Deliver into DC RT: Deliver in DC
(WCTI transaction)
WT: Outside Processing
(Cost Processor)
Dr WIP Val OSP DC 10
Cr RI DC 10
NOTE:
• For phase 1, I/C accounting for OSP items will not use transfer price. I/C invoices will be a pure charge back. The I/C cost of sales at PO price will
be offset by the I/C Revenue, also at PO price, thereby ensuring that there is no recognition of I/C profit
OU1 Reconciliation OU2 Reconciliation
Dr I/C Cost of Sales 10
Dr. I/C Receivable 10
Cr. I/C Revenue 10
Cr. Accrual 10
Dr WIP Val. OSP 20
Cr. I/C Payable 20

52. Intercompany Transactions 52
Return in Flow 8: Global Procurement with Shop Floor destination of OSP item – OSP charges at PO price
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving DC RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 10
Cr WIP Val OSP DC 10
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
(No accounting)
DC RI RC
(Accounting transaction)
(Receiving Processor)
Dr Accrual 10
Cr I/C Cost of Sales 10
(I/C Invoicing)
Dr I/C Revenue 10
Cr I/C Receivable 10
(Receiving Processor)
Dr I/C Accrual 10
Cr RI DC 10
(I/C Invoicing)
Dr I/C Payable 10
Cr I/C Accrual 10
T3 Credit Memo Supplier sends credit memo Dr Liability 11
Cr IPV 1
Cr Accrual 10
OU1 Reconciliation OU2 Reconciliation
Dr. I/C Revenue 10
Dr. Liability 11
Cr. IPV 1
Cr. I/C Cost of Sales 10
Cr. I/C Receivable 10
Dr. I/C Payable 10
Cr. WIP Val OSP 10
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
$10
PO price
10$
PO price
Shop
Floor
any item typeOSP item

53. Intercompany Transactions 53
Flow 9: Global Procurement with Shop Floor destination of OSP item – OSP charges at standard rate
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
(Receiving Processor)
Dr I/C Cost of Sales 10
Cr Accrual 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Receiving Processor)
Dr RI DC 10
Cr I/C Accrual 10
(I/C Invoicing)
Dr I/C Accrual 10
Cr I/C Payable 10
T2 Deliver into DC RT: Deliver in DC
(WCTI transaction)
WT: Outside Processing
(Cost Processor)
Dr WIP Val OSP DC 20
Cr RI DC 10
Cr PPV 10
NOTE:
• Any transfer price that is set up for this item is ignored.
OU1 Reconciliation OU2 Reconciliation
Dr. I/C Receivable 10
Dr. I/C Cost of Sales 10
Cr. I/C Revenue 10
Cr. Accrual 10
Dr. WIP Val. OSP 20
Cr. I/C Payable 10
Cr. PPV 10
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
PO
OU: OU1
Ship to: DC
OSP Item
Shop Fl. dest.
any item type
Shop
Floor
Procuring Txn Flow: OU1->OU2

54. Intercompany Transactions 54
Return in Flow 9: Global Procurement with Shop Floor destination of OSP item – OSP charges at standard rate
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving DC RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 10
Dr PPV 10
Cr WIP Valuation DC 20
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
(No accounting)
DC RI RC
(Accounting transaction)
(Receiving Processor)
Dr Accrual 10
Cr I/C Cost of Sales 10
(I/C Invoicing)
Dr I/C Revenue 10
Cr I/C Receivable 10
(Receiving Processor)
Dr I/C Accrual 10
Cr RI DC 10
(I/C Invoicing)
Dr I/C Payable 10
Cr I/C Accrual 10
T3 Credit Memo Supplier sends credit memo Dr Liability 11
Cr IPV 1
Cr Accrual 10
OU1 Reconciliation OU2 Reconciliation
Dr. I/C Revenue 10
Dr. Liability 11
Cr. I/C Receivable 10
Cr. I/C Cost of Sales 10
Cr. IPV 1
Dr. I/C Payable 10
Dr. PPV 10
Cr. WIP Val OSP 20
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
$10
PO price
10$
PO price
Shop
Floor
any item typeOSP item

55. Intercompany Transactions 55
Flow 10: Global Procurement with Shop Floor destination of EAM direct item
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Receipt in DC RT: Receive in DC
RC DC
(Accounting transaction)
(Receiving Processor)
Dr I/C Cost of Sales 10
Cr Accrual 10
(I/C Invoicing)
Dr I/C Receivable 10
Cr I/C Revenue 10
(Receiving Processor)
Dr RI DC 10
Cr I/C Accrual 10
(I/C Invoicing)
Dr I/C Accrual 10
Cr I/C Payable 10
T2 Deliver into DC RT: Deliver in DC
(WCTI transaction)
WT: Direct Shopfloor Delivery (Cost Processor)
Dr Work Order Material 10
Cr RI DC 10
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
10$
PO price
10$
PO price
PO
OU: OU1
Ship to: DC
Direct Item
Shop Fl. dest.
any item type
Shop
Floor
Procuring Txn Flow: OU1->OU2

56. Intercompany Transactions 56
Return in Flow 10: Global Procurement with Shop Floor destination of EAM direct item
Time Transaction Description OU1 Accounting OU2 Accounting
T1 Return to receiving DC RI DC
(Regular transaction)
(Receiving processor)
Dr RI DC 20
Cr Work Order Material 20
T2 Return to vendor
(Purchasing)
RT: Return DC RI to S1
(No accounting)
DC RI RC
(Accounting transaction)
(Receiving Processor)
Dr Accrual 10
Cr I/C Cost of Sales 10
(I/C Invoicing)
Dr I/C Revenue 10
Cr I/C Receivable 10
(Receiving Processor)
Dr I/C Accrual 20
Cr RI DC 20
(I/C Invoicing)
Dr I/C Payable 20
Cr I/C Accrual 20
T3 Credit Memo Supplier sends credit memo Dr Liability 11
Cr IPV 1
Cr Accrual 10
DC
SOB2/LE2/
OU2
RC
SOB1/LE1/
OU1
S1
Financial Flow
Physical Flow
$10
PO price
10$
PO price
Shop
Floor
any item typeDirect item

57. Intercompany Transactions 57
CONCLUSION
This paper describes the intercompany business flows and their corresponding accounting entries. This paper
should give sufficient information to help understand the underlying accounting for the intercompany
transactions involving two or more operating units.
ADDITIONAL RESOURCES
• Intercompany Invoicing: How to Set Up and Use this Feature within Oracle Applications, Oracle White
Paper, May 2000.
• Intercompany Invoicing and Advanced Pricing Integration, Oracle White Paper, May 2002.
• Overview of Intercompany Invoicing, Oracle White Paper, July 2005.
• Oracle Inventory Users Guide, 11.5.10.
• Oracle Order Management Users Guide, 11.5.10.
• Oracle Accounts Receivable Users Guide, 11.5.10.
• Oracle Accounts Payable Users Guide, 11.5.10.
• Oracle Purchasing Users Guide, 11.5.10.

58. Intercompany Transactions
July 2005
Author: Karthik Gnanamurthy
Contributing Authors: Krish Ratnam Koothan
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