Making Intercompany Journal Entries

Note:

As of 2018.1, advanced intercompany journal entries replace legacy intercompany journal entries in new OneWorld accounts.

Intercompany journal entries are a specialized type of journal available specifically for OneWorld. An intercompany journal entry records debits and credits to be posted to ledger accounts for transactions between two subsidiaries. Intercompany journal entries adjust the value of any set of accounts without entering transactions such as invoices or bills.

An advanced version of intercompany journal entries is now available. You can define multiple receiving subsidiaries, change the base currency to any currency set up in your system, and use the Auto Balance functionality. For information, see Making Advanced Intercompany Journal Entries.

The Automated Intercompany Management feature automatically generates intercompany elimination journal entries during the period close process. If you use this feature, the intercompany journal form includes an Eliminate box to identify lines to be eliminated. For more information, see Automated Intercompany Management Overview.

If you enable the Intercompany Time and Expense feature, you can create intercompany time entries and expense transactions. You can create intercompany adjustment journal entries to transfer time, expense, or both charges from one subsidiary to another. For these journals, you have the option of using the intercompany clearing account that is automatically created when this feature is enabled and their associated transactions such as journal entries. For expense charges, you can generate automated adjustments instead of creating intercompany journal entries. See Enabling Intercompany Time and Expenses.

Important:

When NetSuite released the Intercompany Time and Expenses feature, the first set of accounts created were named Intercompany Payable/Receivable XXX, where XXX denoted the currency ISO code. In 2013.1, NetSuite OneWorld introduced the Intercompany Clearing XXX account. This new account replaced the Intercompany Payable/Receivable Account for new accounts because the existing accounts were being used by the Intercompany Elimination feature. The change applied to only new accounts. Existing accounts were not renamed. In 2014.1, NetSuite OneWorld introduced new intercompany clearing accounts for payable and receivable that are not currency locked. These new clearing accounts are used for intercompany transactions. All existing currency-locked intercompany clearing accounts (the Intercompany Payable/Receivable accounts) are now child accounts of the new clearing account. For more information, see Intercompany Elimination Overview.

You also have the option of importing intercompany journal entry data from a CSV file. For more information, see Importing a Journal Entry.

For general information about making journal entries in OneWorld, see Journal Entries in OneWorld. For examples, see Example of Intercompany Journal Entries. For information about automatically creating journal entries from allocation schedules, see Creating Intercompany Allocation Schedules.

To make an intercompany journal entry:

  1. Go to Transactions > Financial > Make Intercompany Journal Entries.

  2. In the Classification section, select the subsidiary initiating the ledger transaction. You must select the subsidiary before you can accept or select the currency.

    The first line of this journal entry must post to the selected subsidiary.

    Important:

    All lines of this journal entry must post to either the Subsidiary or the To Subsidiary. No other subsidiaries can be associated with lines on this journal entry.

  3. In the Primary Information section:

    1. In the Entry No. field, accept the default or enter a different number.

      Note:

      If journal entries are assigned autogenerated numbers in your account, you cannot change the default number unless the override permission is enabled for Journal. Go to Setup >Company > Auto-Generated Numbers > Document Numbers subtab. Check the Allow Override box on the Journal line. For more information, see Set Auto-Generated Numbers.

    2. Review the Out of Balance By fields as you enter journal lines. They indicate whether the debits and credits in the journal entry balance.

    3. In the To Subsidiary field, choose the second subsidiary for this ledger transaction.

      Note:

      If one or both of the subsidiaries selected in the Subsidiary or To Subsidiary field is assigned to vendor or customer records, you can make intercompany journal entries for any of these vendors or customers. To do this, on the Lines subtab, select the shared vendor or customer from the Name field. For more information about shared records, see Assigning Subsidiaries to a Vendor and Assigning Subsidiaries to a Customer.

    4. By default, the Currency field displays the base currency of the subsidiary selected in the Subsidiary field.

      You can change this value to the base currency of the subsidiary selected in the To Subsidiary field.

      If one of the subsidiaries uses a base currency different from the selected currency, the journal entry is translated into that subsidiary's base currency before it posts to that subsidiary's ledger. This translation is based on the exchange rate entered on the intercompany journal form.

    5. The Exchange Rate field is the current exchange rate between the selected currency and the base currency of the other subsidiary in the transaction.

      You can edit the exchange rate on this form for only this transaction. To affect additional future transactions, you can also update the currency record with the entered exchange rate.

    6. If you have journal approval permission, check the Approved box to approve your journal entry.

      If you do not check this box, this entry does not post until it is approved.

      Important:

      The Approved box displays only if the Require Approvals on Journal Entries preference is enabled. Go to Setup > Accounting > Accounting Preferences > General subtab. See Require Approvals on Journal Entries Preference.

      The Approved box does not display if you have enabled the Journal Entries approval routing preference to use SuiteFlow to create a custom journal entry approval routing. See Use Journal Entry Approval Routing.

    7. In the Date field, accept today's date or enter a new date for the journal entry.

    8. If you use fiscal periods, you see a Posting Period field.

      The posting period is determined when the journal entry is approved. When you approve a journal entry, you can select a different value than the one initially displayed. You cannot select a closed period. You may be able to select an open and locked period if your role includes the Override Period Restrictions permission.

    9. Leave the Reversal Date field blank and Defer Entry box blank, unless you want to create a reversing entry at the same time.

      If you check the Defer Entry box, the Reversal Date field is mandatory.

      For information about reversing entries, see Reversing Journal Entries.

    10. In the Memo field, enter information to help you identify this journal entry in a list of other journal entries.

      The value in this field displays on the List page.

  4. If you have enabled Departments, Classes, or both on the Company subtab of the Enable Features page, select the appropriate classification to associate with this journal entry.

    For information about Departments and Classes, see Departments and Classes Overview.

  5. On the Lines subtab, enter the detail information for the journal lines.

    The columns that appear are based upon the permissions set for your user role.

    Tip:

    You can navigate down the lines by pressing the Enter key on your keyboard. You cannot navigate up the lines.

    1. In the Subsidiary field, select the subsidiary to associate with this journal line. Only the Subsidiary or To Subsidiary can be selected.

      The first line of this journal entry must post to the subsidiary selected in the Subsidiary field. Lines subsequent to the first may post to either the Subsidiary or To Subsidiary.

      Note:

      If the subsidiary you select is assigned to vendor or customer records, you can make journal entries for any of these vendors or customers. To do this, on the Lines subtab, select the vendor or customer from the Name field. For more information about shared records, see Assigning Subsidiaries to a Vendor and Assigning Subsidiaries to a Customer.

    2. In the Account field, select the ledger account to be affected by this journal line.

      If you use the Automated Intercompany Management feature, you can select an intercompany account. The Eliminate box is checked to flag the line for elimination at period end. See Elimination Through the Automated Intercompany Management Feature.

      If you enabled the Intercompany Time and Expense feature, you can use the subsidiaries' intercompany clearing account for entries that transfer charges for time or expenses. See Intercompany Clearing Account.

      The list of available accounts is filtered according to any class/department/location restrictions set for your role. Accounts that are associated with classes, departments, and locations to which your role does not have access are not available in the Account list.

    3. In the Debit or Credit field as appropriate, enter the amount of the line item.

    4. Optionally, enter a memo to help you recognize this entry in a register for this account.

    5. Optionally, in the Name field, select a customer, employee, project, or vendor to associate with this entry.

      If you use the Customers and Multiple Currencies feature, you can create a journal entry for an entity in any of that entity's currencies.

      If you use Automated Intercompany Management, select an intercompany customer or intercompany vendor, as appropriate.

      Note:

      NetSuite filters the list of options in this field and includes only entities that support the selected base currency. If the subsidiary you select is assigned to vendor or customer records, you can make journal entries for any of these vendors or customers. To do this, on the Lines subtab, select the vendor or customer from the Name field. For more information about shared records, see Assigning Subsidiaries to a Vendor and Assigning Subsidiaries to a Customer.

    6. If you have enabled Locations on the Company subtab of the Enable Features page and you specify classifications at the line-level, select the appropriate location to associate with this line.

      For information about Locations, see Locations Overview.

    7. If you use the Revenue Recognition or Amortization features:

      1. In the Schedule column list, select the appropriate template.

        Revenue recognition templates display when the Revenue Recognition feature is enabled. Amortization templates display when the Amortization feature is enabled.

      2. If you select a variable template, you must also select the associated project in the Customer column list.

      3. Enter a start and end date, if needed.

      4. Enter the residual amount not to be recognized, if needed.

    8. NetSuite automatically marks the intercompany journal lines as elimination if the following three conditions are true:

      • The journal entry was created by an intercompany allocation schedule and the selected subsidiary was an elimination subsidiary.

      • The intercompany elimination accounts used the same elimination algorithm.

      • The accounts were in balance.

      You can manually unmark the lines as elimination by clearing the Eliminate box.

    9. If required, select a tax code to default the tax rate for the line.

      Only tax codes with VAT and GST appear in the Tax code list.

    10. Enter the VAT or GST tax amount for the line, if any.

    11. In the Tax Account field, select the account for the tax.

    12. Click Add.

      Tip:

      When line details are similar, click Copy Previous and then make modifications as required.

    13. Repeat these steps for each line item.

      When you finish entering line items, the Debit and Credit out of balance fields at the top of the page should be blank. If either field contains an amount, your line items are out of balance and you cannot save this entry.

      To post an intercompany journal entry, the total debits and credits must balance by subsidiary for every transaction. Debit and credit amounts between subsidiaries can be different. Upon saving the intercompany journal entry in this case, NetSuite alerts you that the journal entry does not balance between subsidiaries. To save the journal entry, click OK.

  6. On the Communication subtab, you can attach files and notes to this transaction.

    1. On the User Notes subtab, enter a title and note for any comments you want to add to this transaction. Click Add after each note

    2. On the Files subtab, select and attach files from the File Cabinet related to this transaction. To upload a new file to the File Cabinet, select New from the list in the Attach Files column.

    3. Use the Events, Tasks, and Phone Calls subtabs to add to attach activities, such as events, phone calls, and tasks to this transaction. For more information, see Attaching Events, Tasks, and Calls to Records and Transactions.

  7. If the Multi-Book Accounting feature is provisioned in your account, the Accounting Books subtab appears. This subtab shows the secondary books, if any, and their respective base currencies and exchange rates. For information about Multi-Book Accounting, see Using Multi-Book Accounting.

  8. Click Save.

Important:

When you create an intercompany journal entry for two subsidiaries with different base currencies, the general ledger impact may be different for each subsidiary. This is due to revaluation.

VAT/GST for Intercompany Journal Entries

When you create an intercompany journal entry, include VAT/GST information in the VAT and VAT Amt fields on the Lines subtab. These fields are available for subsidiaries with a tax nexus set up and a reporting requirement for VAT or GST.

Related Topics

Journal Entries in OneWorld
System-Generated Journals for Payments
Elimination Journal Entries
Making Advanced Intercompany Journal Entries
Enabling Intercompany Time and Expenses

General Notices