Intercompany Account Maintenance

Menu Path: General Ledger $Images\bluerarw.gif$ Accounts $Images\bluerarw.gif$ Intercompany Account Maintenance

Purpose

Define general ledger intercompany account relationships among companies (corporate entities).

Overview

Use Intercompany Account Maintenance to set up relationships between companies. If you have defined company elements in Ledger Maintenance, then you need to set up the intercompany accounts (and/or relationships) to keep those companies in balance when there is an intercompany transaction. There are simple and complex methods to handle intercompany transactions (see below). For more information, see General Ledger Intercompany FAQ.

Simple Intercompany Setup

The simplest way to set up intercompany accounts is to set up one default intercompany account per company. In this scenario, you are not concerned about tracking intercompany balances for each related company that a specific company has transactions with.

Example The first element of the general ledger account structure is the company definition and there are three companies, as follows:

Company	G/L Intercompany Account	G/L Intercompany Name
01	01-2100-000	Intercompany
02	02-2100-000	Intercompany
03	03-2100-000	Intercompany

The sum of the balances of these three intercompany accounts equals zero. If Company 01, Account 01-2100-000 had a balance, you would not know whether the balance was a result of transactions with Company 02 and/or Company 03 (unless you perform drill-down analysis on specific transactions).

Complex Intercompany Setup

A more complex way to set up intercompany accounts is to define multiple intercompany accounts from each company to each other company.

Example The first element of the general ledger account structure is the company definition and there are three companies.

Company 1	Company 2	Company 1's Intercompany Account for Company 2	Company 2's Intercompany Account for Company 1
01	02	01-2100-002	02-2100-001
01	03	01-2100-003	03-2100-001
02	03	02-2100-003	03-2100-002

The sum of the balances of these six intercompany accounts equals zero. Also, the sum of the account balances for each Company 1/Company 2 pairing equals zero. If Company 01, Account 01-2100-002 had a balance, you would know that it related to transactions done only with Company 02.

A normal customer invoice creates the following journal entry:

Company	Account	Debit Amount	Credit Amount	Comments
01	01-0100-001 (Accounts Receivable)	1000		There is only one company, and so no intercompany entries are required.
01	01-0400-001 (Sales)		700	There is only one company, and so no intercompany entries are required.
03	03-0400-001 (Sales)		100	Now, there is a second company, and so intercompany entries are required.
02	02-0400-001 (Sales)		200	Now, there is a third company, and so additional intercompany entries are required.

Total		1000	1000

The software creates the following journal entry to balance the general ledger for the three companies:

Company	Account	Debit Amount	Credit Amount	Comments
01	01-2100-003 (Intercompany)		100	The software finds company 01's intercompany account for company 03.
01	03-2100-001 (Intercompany)	100		The software finds company 03's intercompany account for company 01.
03	01-2100-002 (Intercompany)		200	The software finds company 01's intercompany account for company 02.
02	02-2100-001 (Intercompany)	200		The software finds company 02's intercompany account for company 01.

Total		300	300

The totals for each company are as follows:

Company	Debit Amount	Credit Amount
01	1000	1000
02	200	200
03	100	100

Note Even if using a complex intercompany setup, you will still need to setup the simple intercompany defaults as a safety net so that intercompany transactions are always in balance.

Ribbon Home Tab Buttons

Button	Description
Exit	Click this button to close the Intercompany Account Maintenance window.
New	Click this button to create a new intercompany account relationship.
Update	Click this button to update the selected intercompany account relationship.
Delete	Click this button to delete the selected intercompany account relationship.
Show Data	Click this button to display intercompany account relationships in the Intercompany Account Relationships grid.
OK	Click this button to accept an action. This button is only available after you click the New, Update, or Delete button in the ribbon.
Cancel	Click this button to cancel an action. This button is only available after you click the New, Update, or Delete button in the ribbon.
First	Click this button to display the first intercompany account relationship.
Prev	Click this button to display the previous intercompany account relationship.
Next	Click this button to display the next intercompany account relationship.
Last	Click this button to display the last intercompany account relationship.

Main Tab Fields and Buttons

Field or Button	Description
Company 1	Enter the first company element for the intercompany account relationship, or click the Lookup button to select an account element.
Ledger ID	Enter a ledger ID for the intercompany account relationship, or click the Lookup button to select a ledger ID. Note This field is only available if at least one consolidation ledger is set up.
G/L Account (Company 1)	Enter the intercompany account to use, or click the Lookup button to select an intercompany account. You can only enter or select an account that is of a category for which the Intercompany check box is selected in General Ledger Category Maintenance.
Description (Company 1)	This field displays the description for the selected account for the first company.
Default	Select this check box if the selected account is the default intercompany account for the company. If you select this check box, you do not need to enter account information for a second company.
Company 2	Enter the second company element for the intercompany account relationship, or click the Lookup button to select an account element. This field is only enabled if you clear the Default check box.
G/L Account (Company 2)	Enter the intercompany account to use, or click the Lookup button to select an intercompany account. You can only enter or select an account that is of a category for which the Intercompany check box is selected in General Ledger Category Maintenance. This field is only enabled if you clear the Default check box.
Description (Company 2)	This field displays the description for the selected account for the second company. This field is only enabled if you clear the Default check box.
Intercompany Account Relationships	This grid displays all intercompany relationships after you click the Show Data button in the ribbon.