Understanding Interunit Accounting Examples

This table describes the accounting entries that you can create using the three different types of interunit stock transfers

Type of Transfer	Description	Examples
Interunit transfer using only an intransit account	The cost of the inventory stock is entered into an intransit account while being moved from one inventory business unit to another. Use this approach when both inventory business units post to the same general ledger.	Example 1
Interunit transfer using interunit receivables and interunit payables accounts	An intransit account is used along with interunit receivables and payables accounts recorded for each inventory business unit. Both inventory business units post to different general ledger business units. Use this approach when transferring stock between separate legal entities or within the same legal entity.	Examples 2.1 to 2.3
Interunit sales approach (intercompany)	An intercompany sale is recorded with the source inventory business unit recording a sale and the linked billing business unit issuing a voucher (invoice) for the stock transfer to the payable unit of the receiving business unit. Use this approach when transferring stock between separate legal entities or within the same legal entity. The Intercompany method is required if the GL business units use different currencies.	Examples 3.1 to 3.4

All of the examples use the following cost elements:

• 100 (Material- General)

• 601 (Landed- Duty)

• 751 (Addl Trans- Freight)

Determining the Inventory Account

For all the examples below, the location accounting feature determines how the system selects the ChartField combination used for the inventory stock account. The inventory account is debited for receipt of stock and credited for shipment of stock. The location accounting feature is turned on at the business unit level by selecting the Location Accounting Required check box on the Inventory Options page (Set Up Financials/Supply Chain, Business Unit Related, Inventory, Inventory Options).

• If the Location Accounting Required check box is not selected, the inventory account is derived from the Accounting Rules page (Account Distribution page) for the applicable transaction group.

• If the Location Accounting Required check box is selected, the inventory account is derived from the storage area from which the inventory is shipped.

Determining the Intransit Account

For all the examples below, the intransit inventory account defined using the inventory business unit combinations on the InterUnit Ownership page or from the intransit account defined in the centralized interunit and intraunit processor.