Example of Accounting of Intraorganization Transfers with Cost Propagation
This example illustrates:
-
Material moment transactions that are captured in Oracle Inventory Management and interfaced to Oracle Receipt Accounting and Oracle Cost Accounting.
-
Accounting entries that Receipt Accounting and Cost Accounting generate for the transfer of goods within an organization.
Scenario
A transfer order is issued from an inventory to an expense destination within an organization. The quantity of goods transferred is 10 units and the cost per unit is $12.00. There's a subsequent cost adjustment of $3.00 per unit. The Actual cost method is used and Cost Propagation is enabled in the cost profile.
Accounting Events
For this transfer to expense destination, the corresponding events along with the transaction creating system and subledger are summarized in this table.
|
Event |
Transaction Creating System |
Subledger |
|---|---|---|
|
Miscellaneous Receipt |
Inventory |
Cost Accounting |
|
Transfer Order Issue |
Inventory |
Cost Accounting |
|
Transfer Order Receipt |
Receiving |
Receipt Accounting |
|
Transfer Order Deliver to Expense |
Receiving |
Receipt Accounting |
|
Receipt Cost Adjustment |
Cost Accounting |
Cost Accounting |
|
Transfer Order Expense Adjustment |
Cost Accounting |
Receipt Accounting |
In the case where the transfer is without a manual receipt at destination, the events Transfer Order Logical Receipt and Transfer Order Logical Deliver to Expense will replace Transfer Order Receipt and Transfer Order Deliver to Expense respectively.
Analysis
Receipt Accounting and Cost Accounting create accounting entries for the transfer of goods.
Accounting Entries
This table describes the receipt and cost accounting entries for the transfer order with manual receipt at expense destination.
|
Subledger |
Event |
Inventory Org/VU |
Accounting Line |
Cost Element |
Amount in USD (+Dr/-Cr) |
Basis of Amount |
|---|---|---|---|---|---|---|
|
Cost Accounting |
Miscellaneous Receipt |
Subinventory 1 |
Inventory |
Material |
+ 120.00 |
Transaction Cost |
|
Cost Accounting |
Miscellaneous Receipt |
Subinventory 1 |
Offset |
Material |
- 120.00 |
Transaction Cost |
|
Cost Accounting |
Transfer Order Issue |
Subinventory 1 |
Trade in Transit |
Material |
+ 120.00 |
Current Item Cost |
|
Cost Accounting |
Transfer Order Issue |
Subinventory 1 |
Inventory |
Material |
- 120.00 |
Current Item Cost |
|
Receipt Accounting |
Transfer Order Receipt |
Expense Destination |
Receiving Inspection |
+ 120.00 |
Transfer Price |
|
|
Receipt Accounting |
Transfer Order Receipt |
Expense Destination |
Trade in Transit |
- 120.00 |
Transfer Price |
|
|
Receipt Accounting |
Transfer Order Deliver to Expense |
Expense Destination |
Expense |
+ 120.00 |
Transfer Price |
|
|
Receipt Accounting |
Transfer Order Deliver to Expense |
Expense Destination |
Receiving Inspection |
- 120.00 |
Transfer Price |
|
|
Cost Accounting |
Receipt Cost Adjustment |
Subinventory 1 |
Inventory |
Material |
+ 30.00 |
Cost Adjustment |
|
Cost Accounting |
Receipt Cost Adjustment |
Subinventory 1 |
Offset |
Material |
- 30.00 |
Cost Adjustment |
|
Cost Accounting |
Transfer Order Issue |
Subinventory 1 |
Trade in Transit |
Material |
+ 30.00 |
Propagated Cost Adjustment |
|
Cost Accounting |
Transfer Order Issue |
Subinventory 1 |
Inventory |
Material |
- 30.00 |
Propagated Cost Adjustment |
|
Receipt Accounting |
Transfer Order Expense Adjustment |
Expense Destination |
Expense |
+ 30.00 |
Propagated Cost Adjustment |
|
|
Receipt Accounting |
Transfer Order Expense Adjustment |
Expense Destination |
Trade in Transit |
- 30.00 |
Propagated Cost Adjustment |