Define Allocation Rules to Allocate Rent Costs from General Ledger

This example demonstrates how to set up allocation rules to allocate rent costs.

Your enterprise has an organization that rents building space, and the finance department wants to allocate rental cost to the projects owned by the organization. The project managers can then use the allocation to bill costs to customers. The Payables department charges rent to a different general ledger account for each organization by cost center. You implement the allocation rule for the organization. Allocate 100 percent of the rental cost collected in the general ledger to all eligible tasks for San Diego organization projects once a month. You can prorate the allocation based on the previous month's total raw cost for each task. Project Vision Software Install is performed completely at the customer location and should not be allocated any rent costs. This project must be excluded from receiving rent allocation.

You are implementing allocation rules for the organization. You want to allocate 100 percent of the rental cost collected in the general ledger account for the organization to all eligible tasks once a month. You also want to prorate the allocation based on the previous month's total raw cost for each task. The following table summarizes key decisions for this scenario:

Decisions to Consider	In this Example
How to allocate the costs?	Allocate to all eligible tasks and prorate the allocation by the total actual raw cost accrued for each task during the prior accounting period.
When to allocate costs?	Allocate rental costs once each accounting period.
What costs to allocate?	Allocate 100 percent of rental costs collected in the accounting period for the cost center.

You define the allocation rule in this scenario to distribute amounts between and within projects and tasks in a business unit. This allocation rule defines the following:

• Source of the amounts to allocate

• Target projects and tasks to receive the allocation

• Method to generate offset transactions, if required

• Method to divide the source amount among the target projects and tasks

• Attributes for the allocation and offset transactions, including the expenditure type, expenditure organization, and expenditure type class for the resulting expenditure items

Defining the Allocation Rule

1. On the Project Costs work area, click Manage Allocation Rules in the Tasks pane.

2. Click Create to open the Create Allocation Rule page.

3. Complete the general details to define the allocation rule for the following key fields as shown in the table.

   Field	Value
   Business Unit	InVision Services
   Name	San Diego Rent Allocation
   Description	Rule to allocate San Diego rental costs to projects
   Allocation Method	Full
   Allocation Period Type	Accounting Period
   Targets Selection	Within business unit
   Basis Method	Prorate
   Expenditure Organization	San Diego
   Expenditure Type Class	Miscellaneous Transaction
   Expenditure Type	Rent Allocation

Defining Allocation Sources

1. Click Sources and then Ledger Sources and complete the key fields as shown in the table.

   Field	Value
   Allocation Pool Percentage	100
   Source Amount Class	Period-to-date
   Ledger Sources Account	01-420-7580-000
   Percentage	100
   Subtract	Leave unchecked

Defining Allocation Targets

1. Click Targets and complete the key fields as shown in the table.

   Field	Value
   Line Number	1
   Project Organization	San Diego
   Line Number	2
   Project	Vision Software Install
   Exclude	Select the check box.

Defining Allocation Offsets

1. Click Offsets and complete the key fields as shown in the table.

   Field	Value
   Offset Method	Specific project and task
   Project	Allocation Offset Project
   Task	1.0
   Expenditure Organization	San Diego
   Expenditure Type Class	Miscellaneous Transaction
   Expenditure Type	Rent Allocation

Defining Allocation Basis Details

1. Click Basis and complete the key fields as shown in the table.

   Field	Value
   Basis Category	Actual Amounts
   Amount Type	Total Raw Cost
   Amount Class	Period-to-date
   Relative Period	-1

2. Click Save and Close.