In Part 1 of this article, we learnt about basics of intercompany and Intracompany and we also understood about accounting treatment of Intercompany transactions. We also saw impacts of intercompany transactions along with usage of intercompany segments. In this part 2, we will understand about Intercompany transactions processing in Fusion Application. we will also learn about how to manage Intercompany transactions.
Intercompany Overview in Fusion Application
In Oracle Fusion Financial, Intercompany supports business activity between two or more related legal entities within the same enterprise. An Intercompany segment label defines a segment in a chart of accounts structure which means a segment with this label in Oracle Fusion Subledger Accounting helps to populate a value in this segment to identify the trading partner for the intercompany transaction by using Intercompany Balancing Rules.
Refer to Article “ORACLE FUSION FINANCIALS GL INTERCOMPANY BALANCING LINES” written by Anil to understand how balancing lines are auto generated.
Automatic intercompany balancing journal creation in Oracle Fusion Financials ensure proper recording of journals across legal entities and Intercompany balancing rules are defined for pairs of primary balancing segment values, pairs of legal entities, pairs of ledgers, or for a chart of accounts structure. These accounts are used to build the accounts for intercompany balancing lines.
Account combinations for intercompany balancing lines are automatically created based on combinations of source, category, and balancing segment values of the line to be balanced. Intercompany transaction account definition rules are used to build the default distribution accounts for intercompany transactions for a specific ledger.
Intercompany General Ledger Integration in Fusion Application-
Below are the two options to complete processing of intercompany transactions in Oracle Fusion General Ledger.
General Ledger Integration
In this option, intercompany transactions are directly transfer to the Fusion General Ledger if we do not need intercompany invoices. General Ledger transfer process allows to automatically transfer to multiple ledgers with a single submission request.
Once we are through with the above step of posting transactions in general ledger, then we can inquire on account balances or journal lines, and drill down to the source intercompany transaction.
Intercompany Receivables and Payables Integration