How Payroll Cost Results are Calculated

Costing and offset results are created when you process payroll runs and payments.

For example, when calculating the payroll, the application typically costs a value in a salary run result as a debit to an expense account and it offsets the same amount as a credit to a payroll liability account.

Account numbers are created by the application and based on the information entered into the cost allocation key flexfield structure when you use the costing setup tasks.

Costs Calculated Based on Account Type

This table shows you the different steps performed by the application to calculate costs based on the type of account.

Account	Cost Calculation Steps
Cost	Calculates costs for the input values specified on the element eligibility record. Builds each segment by checking for: Costed and Distributed costing types at each level of the cost hierarchy. Fixed Costed costing types at the payroll, element, and element eligibility levels Calculates the cost for each account, when percentages of the costing is allocated to different accounts. Places any unallocated amount in a default account. Places invalid results in a suspense account. Determines the cost account, if a segment has a blank value. The determination depends on whether the segment of the cost allocation key flexfield is required or optional and whether a suspense account is defined. Optional, regardless of whether a suspense account is defined, costing result displays a null segment Required, and suspense account is defined, costing result is placed in suspense account Required, and suspense account isn't defined, costing result errors Adds cost results for a distributed element to the elements included in the distribution group, based on the ratio each element contributes to the total amount for the distribution group. Creates a debit or credit result based on the element classification settings.
Priority	Calculates the cost using the account number specified for the priority account on the element eligibility record. Calculates the cost account number for the remaining percentage when you allocated only a percentage of the cost.
Offset	Calculates the offset using the segments specified for the offset account on the element eligibility record. For blank segments, uses the account number derived for the equivalent segment of the cost account for the same element eligibility record.
Payroll Liability, Cash Clearing, Cash	Calculates the account number using the segments specified for the payment source on the Payment Source page.