Defining Intercompany Relations
Use the Intercompany Relations window to define, query, and update intercompany relations between two operating units in a multi-organization environment. These operating units are the Shipping organization and the Selling organization.
When a sales order is entered in an operating unit, the shipping organization is often part of a separate operating unit, belonging to a separate set of books. Once the sales order is shipped to the customer, the inventory asset account for the shipping organization is credited and the cost of goods sold account is debited. On the other hand, sales revenue must be recognized in the order entry organization. If the two organizations belong to different operating units, the system must perform accounting distributions to record the intercompany revenue, receivable, and payable entries.
Oracle Inventory and Oracle Receivables must be installed before you can define intercompany relations. If Oracle Payables is not installed, the fields in the AP Invoicing for Selling region are not required.
To define intercompany relations:
2. Enter the Shipping Operating Unit. The list of values displays only the organizations defined as operating units. See: Creating an Organization.
3. Enter the Selling Operating Unit. The list of values displays only the organizations defined as operating units for which no intercompany relationship has been defined.
4. Enter either the Customer name or customer Number. When you enter one, Inventory supplies the other. See: Entering Customers. A customer is defined in Oracle Receivables to represent the shipping operating unit for AR accounting transactions.
5. Enter the customer Location, if the customer has multiple locations. The list of values displays only locations defined for the customer for which Site Use is set to Bill To.
7. Enter the Supplier and, if available, the Supplier Site. See: About Suppliers. A supplier is defined in Oracle Payables to represent the selling operating unit for AP accounting transactions.
8. Enter the Freight Account. The list of values is restricted to the Chart of Accounts of the selling organization.
9. Select Revalue Average if you are using average costing.
To update intercompany relations:
1. Navigate to the Intercompany Relations window from the menu.
2. Query on the desired operating unit in the Shipping field to display the existing relation for that unit
3. You can update information in all fields except Shipping. See the discussions of the fields in the previous section.