11.8.7 Transfer Pricing Un-priced Accounts
Accounts using the Un-priced Account method are a special case of direct transfer pricing in the Management Ledger table. The Un-priced Account transfer pricing methodology uses the WATR from other accounts to derive a WATR for the Unpriced account. This is accomplished by averaging the WATR for the component accounts, weighted by their relative LS Balances.
In this example, Product 100 is an un-priced account that is transfer priced based on Products 4, 5, and 10. First, as shown in the following table, a new row is added to the VMT and populated with the balance stored in the Management Ledger table.
Table 11-22 VMT with a New Row Displaying Management Ledger Table Balance
| ORG_UNIT_ID | PRODUCT_ID | Bal | Bal x TfrRate | LS Bal | LSBal x TfrRate |
|---|---|---|---|---|---|
| 1 | 3 | 300.00 | 1000.00 | 250.00 | 833.33 |
| 1 | 4 | 125.00 | 562.00 | 200.00 | 900.00 |
| 1 | 5 | 200.00 | 600.00 | 100.00 | 300.00 |
| 1 | 10 | 200.00 | 1000.00 | ||
| 1 | 100 | 990.00 |
Then, the WATR for Product 100 is calculated by computing the weighted average of the WATRs of Products 4, 5, and 10. The WATR for Product 100 is calculated as follows:
(900 + 300 + 1,000)/(200 + 100 + 200) = 4.4
The VMT is then updated with the standard form of WATR
(990.00 * 4.4) = 4,356.00 = LSBal_x_TfrRate
The following table represents the VMT after the un-priced account has been transfer priced.
Table 11-23 VMT displaying the WATR of Un-priced Account
| ORG_UNIT_ID | PRODUCT_ID | Bal | Bal x TfrRate | LS Bal | LSBal x TfrRate |
|---|---|---|---|---|---|
| 1 | 3 | 300 | 1000.00 | 250.00 | 833.33 |
| 1 | 4 | 125 | 562.50 | 200.00 | 900.00 |
| 1 | 5 | 200 | 600.00 | 100.00 | 300.00 |
| 1 | 10 | 200.00 | 1000.00 | ||
| 1 | 100 | 990.00 | 4356.00 |
Calculation of Overall WATR (Financial Element 170)
After all the Instrument tables and the Management Ledger table information has been accumulated in the VMT, the overall WATR can be calculated for each Org Unit/Product dimension combination and posted to the Management Ledger table. The WATR is simply the sum of all component WATRs (represented in the VMT as LSBal x TfrRate).
For example, WATR is calculated as follows:
833.33 + 900.00 + 300.00 + 1,000.00 + 4,356.00 = 7,089.33= WATR
Generation of Charge/Credit for Funds (Financial Element 450)
After the overall WATR is known, the charge/credit for funds in any period is given by the formula:
WATR * Balance * Accrual Factor = Charge/Credit for Funds
As Oracle Funds Transfer Pricing stores WATR as WATR * Balance, this reduces to:
WATR * Accrual Factor = Charge/Credit for Funds
For example, Charge/Credit for Funds is calculated as follows:
7,089.33 * (30/360) = 590.77 = Charge/Credit for Funds
Ledger Migration of Transfer Rates Under Remaining Term Calculation Mode
The ledger migration process is identical under the Remaining Term calculation mode except that Financial Elements 452 and 172 are substituted for 450 and 170 respectively.
Note that under the Remaining Term calculation mode, the transfer rate source in the Instrument tables is Tran_Rate_Rem_Term.