Example Intercompany Adjustment Scenario

This example occurs in an account where the Intercompany Time and Expense feature is enabled and the Intercompany Expenses accounting preference is set to Allow and Auto Adjust.

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 a later release, 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. Still later, 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 Enabling Intercompany Time and Expenses and Intercompany Elimination Overview.

Background

Sara Peters, an employee assigned to the U.S. based subsidiary of this account provides consulting services to FinCo. Finco is a U.K. based customer associated with the U.K. subsidiary.

Original Expense Report

Sara Peters incurs the following billable expenses recorded in U.S. dollars and records them in an expense report transaction. These expenses are cross-subsidiary. They were incurred by an employee of the U.S. subsidiary during the time in which the employee worked for a customer of the U.K. subsidiary.

Employee	Employee Subsidiary	Expense Category	Memo	Amount	Currency	Customer	Customer Subsidiary
Sara Peters	U.S.	Travel	RT Airfare NY-London	1,600.00	USD	FinCo	U.K.
Sara Peters	U.S.	Lodging	2 nts Hyatt	800.00	USD	FinCo	U.K.
Sara Peters	U.S.	Meals	3 days	600.00	USD	FinCo	U.K.

Expense Report GL Impact

After the expense report is approved by Accounting, the following amounts are posted to U.S. subsidiary accounts:

Account	Amount (Debited)	Amount (Credited)	Name	Subsidiary
Accounts Payable		3,000.00	Sarah Peters	U.S.
Travel	1,600.00		FinCo	U.S.
Lodging	800.00		FinCo	U.S.
Meals	600.00		FinCo	U.S.

Automated Intercompany Adjustment

As part of the period close process in which the expenses occurred, the controller generates automated adjustments to transfer the impact of intercompany expenses. An adjustment with the following lines is generated, all amounts in U.S. dollars:

Subsidiary	Account	Amount (Debited)	Amount (Credited)	Name
U.S.	Intercompany Clearing USD	1,600.00
U.S.	Travel		1,600.00	FinCo
U.K.	Travel	1,600.00		FinCo
U.K.	Intercompany Clearing USD		1,600.00
U.S.	Intercompany Clearing USD	800.00
U.S.	Lodging		800.00	FinCo
U.K.	Lodging	800.00		FinCo
U.K.	Intercompany Clearing USD		800.00
U.S.	Intercompany Clearing USD	600.00
U.S.	Meals		600.00	FinCo
U.K.	Meals	600.00		FinCo
U.K.	Intercompany Clearing USD		600.00

Automated Adjustment GL Impact

The following lines illustrate the automated adjustment's general ledger impact on U.S. and U.K. subsidiary accounts:

An exchange rate specified on the adjustment record translates the general ledger impact for the U.K. subsidiary from the U.S. subsidiary base currency (USD) to the U.K. subsidiary base currency (GBP). This rate is based on the last day of the period in which the adjustment occurred. In this example it is 0.51056877.

Account	Amount (Debited)	Amount (Credited)	Name	Subsidiary
Intercompany Clearing USD	1,600.00			U.S.
Travel		1,600.00	FinCo	U.S.
Travel	816.91		FinCo	U.K.
Intercompany Clearing USD		816.91		U.K.
Intercompany Clearing USD	800.00			U.S.
Lodging		800.00	FinCo	U.S.
Lodging	408.46		FinCo	U.K.
Intercompany Clearing USD		408.46		U.K.
Intercompany Clearing USD	600.00			U.S.
Meals		600.00		U.S.
Meals	306.34			U.K.
Intercompany Clearing USD		306.34		U.K.

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