Intracompany Whitepaper

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Intracompany Balancing In Release 12

An Oracle White Paper May 2008
Intracompany Balancing-Release 12
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TABLE OF CONTENTS EXECUTIVE OVERVIEW.3 INTRODUCTION3 SCOPE.3 1. Settting up a New Ledger.5 2. Defining Intracompany Balancing Rules..15 3. Entering Intracompany Transactions20 4. Level of Summarization..36 5. Clearing Company Balancing Segment Value42 6. Balancing Segment Values to Legal Entity..47 7. Balancing Segment Values to Ledger..53 8. Technical Reference59
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EXECUTIVE OVERVIEW The purpose of this document is to provide users an overview of the intracompany setup in release 12. We also hope that this document would help you build an understanding on the intracompany accounting in release 12.
INTRODUCTION Intra Company balancing rules are used to create balancing lines on journals between balancing segment values either within the same legal entity, or where there is no legal entity context. Intra Company balancing rules are used when more than one balancing segment value exists on a transaction or journal entry. Journal in General Ledger cannot be posted when the debit and credit amounts for each balancing segment value do not net to zero. These journals can be balanced automatically by setting up the balancing rules and enabling the option to balance cross-entity journals. SCOPE The scope of this document is to help you understand the setup steps required for using Intracompany Balancing for a Ledger. This paper would discuss the intracompany setup for the following scenarios: A) Intracompany rules for Ledger without Legal Entity B) Intracompany rules for Ledger with Balancing Segment Values (BSVs) assigned to Legal Entity C) Intracompany rules for Ledger when BSVs are assigned to Legal Entity and Ledger The information provided in this document is relevant for Release 12.
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Overview
Journal entries with multiple balancing segment values are termed as Intracompany journals. Intracompany balancing occurs within a single legal entity or within a group of balancing segment values mapped to a ledger. Intracompany balancing adds additional journal entries to make the journals balance by each balancing segment value Enabling Intracompany balancing legder setup option helps in balancing the intracompany journals automatically using the user defined balancing rules. Intracompany journals have to be balanced manually if the option Enable Intracompany balancing is not selected. Journals not balanced by each balancing segment value would fail with Error 10 Showing unbalanced intercompany journal entry and Error 16 Unable to balance intercomapny accounts upon posting. Intracompany balancing can be defined for each of the debit balancing segment value and credit balancing segment value. A default rule can also be defined with a default debit and credit account that can be used for balancing intracompany journals with multiple balancing segment values. Intracompany balancing can balance the intracompany journal either in summary or detail. Intracompany balancing also facilitates the use of a clearing balancing segment value that can act as a trading partner for all other balancing segment values.
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1. Settting up a New Ledger

Create New Accounting structure: INTRACOMPANY OPERATIONS Navigation: Setup->Financials->Flexfields->Key->Segments
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Define the segments for the structure INTRACOMPANY OPERATIONS assign same value set for company segment and the Intercompany segment Navigation: Setup->Financials->Flexfields->Key->Segments
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Assign Flexfield Qualifiers to all the segments including the Intercompany Segment Navigation: Setup->Financials->Flexfields->Key->Segments
The intercompany segment is the accounting flexfield segment that has the intercompany segment qualifier assigned to it. The intercompany segment qualifier is optional and this segment shares the same value set as the balancing segment. The intercompany segment may be used to keep track of the trading partner and this segment is only used in intracompany balancing
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Compile the Flexfield Definition Navigation: Setup->Financials->Flexfields->Key->Segments
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Define Segment Values for Company Segment Navigation: Setup->Financials->Flexfields->Key->Values
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Define Segment Values for Department Segment Navigation: Setup->Financials->Flexfields->Key->Values
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Define Segment Values for Account Segment Navigation: Setup->Financials->Flexfields->Key->Values
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Create a Primary Ledger without a Legal Entity Navigation: Setup->Financials-> Accounting Setup Manager->Accounting Setups Create Accounting Setup->Define Accounting Representations->Complete Accounting options Update Ledger: Ledger Definition
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Enable Intracompany Balancing and complete the Accounting Options Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Update Ledger ->Ledger Options
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Assign the Ledger to the Responsibility Operations Intrasuper User Navigation: System Administration: Profile->System
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________________________________________________________________________ 2. Defining Intracompany Balancing Rules

Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE
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Update the Intracompany Balancing Rules Click on update Intracompany Balancing Rules. Select Define Rules for No Legal Entity
Note: The rules have to be defined to No Legal Entity, as there is no legal entity assigned to the ledger Operations-No LE
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Create Rule for No Legal Entity by clicking the Create Rule tab
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Create Rule for Source Manual and Category Adjustment
In the above scenario, the intracompany rule is defined for the debit balancing segment 01 and the credit balancing segment 02. For the source manual and category adjustment, if a transaction happens between balancing segment values 02 and 01, debiting balancing segment 02 and crediting 01, then the first rule defined between the balancing segments 01 and 02 would be used. For the rest of the transactions, the rule defined for All Other-All Other would be used. In other words, if there are no rules specifically defined for different balancing segment values separately, then All Other-All Other would be used. Intracompany balancing rules can also be defined with only All Other-All Other combination. Intracompany rule for All Other All Other is the mandatory default rule to be defined to complete the intracompany rules setup.
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Complete the Clearing Options .The setup is not complete without the Clearing Balancing Segment Value Select Options and then select the clearing balancing segment value and click Apply
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3. Entering Intracompany Transactions

Scenario: 1 Enter a journal for the Source Manual and Category Adjustment. Navigation: Journal->Enter
In the above scenario, the transaction is between the balancing segment value 02 and the balancing segment value 01. The journal belongs to source Manual and category Adjustment. Balancing segment 02 requires a credit account and balancing segment 01 requires a debit account for balancing. From the intracompany rule defined for source Manual and category Adjustment the debit account for debit balancing segment 01 is 01.001.1026.02 and credit account for credit balancing segment 02 is 02.001.1027.01.The posting program would use these two accounts for balancing the above journal.
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Journal after Posting Navigation: Journal->Enter
Note: The intracompany rule defined for source Manual and category Adjustment would apply only for the journals with the source Manual and category Adjustment.
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Scenario: 2 Define Intracompany Rule for Source Manual and Category Other Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
Note: The intracompany balancing rules defined for category Other would apply to all the categories for which there are no balancing rules specifically defined.
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Journal created for Source Manual and Category Adjusting Navigation: Journal->Enter
In the above scenario, the intracompany transaction entered between the balancing segment values 01 and 02 for the source Manual and category Adjusting
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The above journal used the intracompany rules defined for source Manual and category Other as there are no rules specifically defined for the source Manual and category Adjusting. The balancing segment 01 required a credit account and balancing segment 02 requires a debit account for balancing. There are no rules specifically defined for each balancing segment value. The All Other All Other rules defined for source Manual and category Other would apply for the above journal.
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Define Intracompany Rule for Source Manual and Category Addition Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
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Select the Clearing Balancing Segment Value for Source Manual and Category Addition
Note: Default Rule would be available in the Default Options only when the option Use for Many to Many Journals Only is selected for the Clearing Balancing Segment Value and when the default rule for the combination All Other-All Other is defined.
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Scenario: 3
In this scenario the following Intracompany Transactions would be discussed. One to One Intracompany The transaction between two balancing segment values with only one balancing segment value with net debit and only one balancing segment value with net credit. One to Many Intracompany The transaction where one balancing segment value transacts with many balancing segments and where there is one balancing segment value with net debit and many balancing segment values with net credit. Many to One Intracompany The transaction where many balancing segment values transacts with one balancing segments and where there is one balancing segment value with net credit and many balancing segment values with net debit. Many to Many Intracompany The transaction where many balancing segment values transact with many other balancing segment values and where there are many balancing segment values with a net debit and many balancing segment values with a net credit. Intracompany balancing follows an order for evaluating the intracompany rules to be used for balancing any intracompany journal. Intracompany rules defined specifically for a debit balancing segment value and a credit balancing segment value would take precedence over all other rules. Intracompany rules explicitly defined for two balancing segment values would be checked first for balancing the journal. If the rules were not defined explicitly for the balancing segment values, then the intracompany balancing would check for the balancing rule defined between an explicit debit balancing segment value and a default value followed by intracompany rule between a default value and an explicit credit balancing segment value. If the intracompany rules are not defined for the above three cases, then the intracompany balancing would check for the rules defined for the debit balancing segment value All Other and the credit balancing segment value All Other. Intracompany rule defined for the debit balancing segment value All Other and the credit balancing segment value All Other is called the default rule. This default rule can be used if the same debit and credit account have to be used while balancing the transactions of different balancing segment values. If the default rule is used the appropriate trading partner balancing segment value replaces the balancing segment of the account combination defined in the intracompany balancing rule.
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One to One Intracompany Journal for the Source Manual and Category Addition Navigation: Journal->Enter
In the above journal the transaction is between the balancing segment values 01 and 02 for the source Manual and category Addition. The balancing segment 01 requires a credit account and the balancing segment 02 requires a debit account for balancing. The credit account for 01 is 01.003.1025.02 and the debit account for 02 is 02.003.1017.01.
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The intracompany balancing rule defined between the debit balancing segment value 02 and the credit balancing segment value 01 are used for the above journal.
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One to Many Intracompany Journal for the Source Manual and Category Addition Navigation: Journal->Enter
In the above journal, the intracompany transaction is between the balancing segment value 01 and the balancing segment values 02 and 03 for the source Manual and category Addition. The balancing segment 01 requires a credit account for balancing the transaction entered against the balancing segments 02 and 03. For balancing the transaction entered with 02, the posting would use the account 01.003.1025.02 and for balancing transaction entered with 03, it would use the account 01.003.1027.03. Similarly, the balancing segment 02 and 03 also require debit accounts for balancing the transactions entered against balancing segment value 01. Balancing segment value 02 would use the account 02.003.1017.01 and balancing segment value 03 would use the account 03.003.1019.01 for balancing the transaction entered with balancing segment 01.
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The intracompany rules defined between the debit balancing segment value 02 and credit balancing segment value 01 and the intracompany rules defined between the debit balancing segment value All Other and credit balancing segment value 01 are used for the above journal.
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Many to One Intracompany Journal for the Source Manual and Category Addition Navigation: Journal->Enter
In the above journal the intracompany transaction is between the balancing segment values 01, 02 and balancing segment value 03 for the source Manual and category Addition The balancing segment 01 would use the account 01.003.1027.03 for balancing the transaction entered with 03. Balancing segment 02 would use the account 02.003.1031.03 for balancing the transaction entered with 03. Balancing segment value 03 would use the account 03.003.1019.01 for balancing transaction entered with 01 and the account 03.003.1026.02 for balancing the transaction entered with 02.
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The posting used the intracompany rules defined between debit balancing segment value All Other and credit balancing segment value 01 and the intracompany rules defined between debit balancing segment value All Other and credit balancing segment value All Other for balancing the above journal
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Many to Many Intracompany Journal for the Source Manual and Category Addition Navigation: Journal->Enter
In the above journal, the intracompany transaction is between the balancing segment values 01, 02, 03 and 04 for the source Manual and category Addition. For Source Manual and Category Addition, the clearing balancing segment value is set as Use for many to many journals only and default option is set as Default Rule. The default rule is the rule defined between the debit balancing segment value All Other and credit Balancing segment value All Other .
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As default rule is selected for Many to Many intracompany journals, the posting used the rules defined for the combination All Other-All Other
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4. Level of Summarization
The Level of Summarization is Summary Net for the Intracompany Balancing Rule defined for Source Manual and Category Adjustment Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
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Journal entered with two balancing segments and four journal lines Navigation: Journal->Enter
The above journal has both debit and credit for each of the balancing segments 01 and 02 and the level of summarization is Summary Net.
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The Summarize Net option of an intracompany balancing rule would summarize the amount for each of the balancing segment and would add an intracompany line for the net amount. In the above journal, the net amount for balancing segment values 01 and 02 is 100. So, intracompany line added for net amount of 100 for each of the balancing segment values.
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The Level of Summarization changed to Detail for the Intracompany Balancing Rule defined for Source Manual and Category Adjustment Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
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Journal entered with two balancing segments and four journal lines Navigation: Journal->Enter
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The detail option of the intracompany balancing rule added one intracompany balancing line for each of the journal lines. For four original lines there are four intracompany lines added by posting program.
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5. Clearing
Company Balancing Segment Value
Define rule for Source Manual and Category Expenditures Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
Clearing balancing segment value allows to define one company to act as the trading partner for all other companies in the organization for certain intracompany transactions. Note: If balancing segment values are assigned to legal entity and/or ledger then assign an additional balancing segment value as a clearing balancing segment value.
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Clearing balancing segment value is selected as Use for All Journals with Default Clearing balancing segment as 03
Note: The Clearing Balancing Segment Value can be used for all the journals or only for Many to Many Journals.
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Enter manual journal for source Manual and Category Expenditures Navigation: Journal->Enter
The above intracompany journal belongs to source Manual and category Expenditures for which the default clearing balancing segment value is 03.
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The default balancing segment is 03. The original amounts would first be transferred to the clearing balancing segment 03. The original debit of the account 01.001.10004.00 would be debited to the account 03.001.1015.01 and the original credit of the account 02.002.1008.00 would be credited to the account 03.001.1023.02. The natural accounts 1015 and 1023 are used from the debit account and credit account of the intracompany rule defined for the source manual and category expenditures.
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Clearing Balancing Segment Value can also be entered manually at the time of creating the journal. Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operations-No LE Update the Intracompany Balancing Rules
If default option is selected as Manually Entered Clearing Balancing Segment Value, then the clearing balancing segment value can be selected in the journal header at the time of entering the journal. The clearing balancing segment value can be selected at the time of journal entry even if a default balancing segment value is given while defining the intracompany balancing rule.
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6. Balancing Segment Values to Legal Entity

Scenario: 4 Intracompany rules for Legal Entity with Balancing Segment Value Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operation with LE Update Intracompany Balancing Rules
The ledger Operations with LE has a legal entity Legal Entity BSV with two balancing Segment values 01 and 02 assigned to it.
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Intracompany balancing rules to be defined for Legal Entity BSV
Intracompany rules have to be defined to Legal Entity BSV as the balancing segment values are assigned only to the legal entity. In this scenario, rules for No legal entity is not relevant as there are no balancing segment values assigned to ledger.
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Define Intracompany rules for the Legal Entity Create Intracompany Balancing Rules for Legal Entity Legal Entity BSV for Source Other and Category Other
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Clearing Balancing Segment Value for Source Other and Category Other
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Journal before Posting Navigation: Journal->Enter
In the above scenario, the journal is between the balancing segment values 01 and 02. The balancing segment values 01 and 02 are assigned to legal entity with the name Legal Entity BSV
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As the balancing segment values 01 and 02 are assigned to the legal entity Legal Entity BSV the posting program would use the intracompany balancing rules defined for the legal entity Legal Entity BSV for the source Other and category Other for balancing the above journal.
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7. Balancing Segment Values to Ledger

Scenario: 5- Assign Balancing Segment Value to Ledger Operations with LE Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operation with LE Update Balancing Segment Value Assignments
In this scenario, the balancing segment values 01 and 02 are assigned to Legal Entity BSV and balancing segment values 03 and 04 are assigned to the ledger Operation with LE.
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Define Intracompany Rules for No Legal Entity
Navigation: Setup->Financials->Accounting Setup Manager->Accounting Setups Query the Ledger Operation with LE Update Intracompany Balancing Rules
Define rules for Legal Entity BSV for intracompany transaction between the balancing segment values 01 and 02. Define rules for No Legal Entity for intracompany transaction between the balancing segment values 03 and 04.
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Intracompany Rules for Source Other and Category Other for No Legal Entity
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Clearing Balancing Segment Value
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Journal before Posting Navigation: Journal->Enter
In the above scenario, the intracompany transaction is between the balancing segment values 03 and 04 which are assigned to the ledger with the name Operations with LE
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The posting used the intracompany rules defined for No Legal Entity for balancing the above journal, which is between the balancing segment values assigned to the Ledger. Note: A transaction between a balancing segment value assigned to legal entity and a balancing segment value assigned to a ledger is not allowed.
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8. Technical Reference
Intracompany rules defined for any source and category are stored in the following two tables: FUN_BALANCE_OPTIONS This table stores the ledger, journal source and category information for which the Intracompany balancing rules have been defined. These rules are used by the Intercompany Balancing API to balancing Intracompany journals. This table also gives the clearing balancing value option selected for a particular source and category.
FUN_BALANCE_ACCOUNTS This table stores the intracompany accounts defined between each trading and transacting balancing segment value. These accounts are used by the Intercompany Balancing API to balancing Intracompany journals The table FUN_BALANCE_OPTIONS and the table FUN_BALANCE_ACCOUNTS are linked by a Template_id. The posting program uses the package FUN_BAL_UTILS_GRP while creating the intracompany lines. The pls files for the package FUN_BAL_UTILS_GRP are fungbalutilb.pls and fungbalutils.pls. The pls files are located at $FUN_TOP/patch/115/sql.
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White Paper Title: Intracompany Balancing In Release 12 [May] 2008 Author: Lakshmi Sammeta, ISC Contributing Authors: Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 www.oracle.com Oracle is a registered trademark of Oracle Corporation. Various product and service names referenced herein may be trademarks of Oracle Corporation. All other product and service names mentioned may be trademarks of their respective owners. Copyright 2001 Oracle Corporation All rights reserved.
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Intracompany Balancing In Release 12

Intracompany Balancing In Release 12

Intracompany Balancing In Release 12

Intracompany Balancing In Release 12

1. Settting up a New Ledger

Compile the Flexfield Definition Navigation: Setup->Financials->Flexfields->Key->Segments

Define Segment Values for Company Segment Navigation: Setup->Financials->Flexfields->Key->Values

Define Segment Values for Department Segment Navigation: Setup->Financials->Flexfields->Key->Values

Define Segment Values for Account Segment Navigation: Setup->Financials->Flexfields->Key->Values

________________________________________________________________________ 2. Defining Intracompany Balancing Rules

3. Entering Intracompany Transactions

Journal after Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

Company Balancing Segment Value

Journal after Posting Navigation: Journal->Enter

6. Balancing Segment Values to Legal Entity

Intracompany balancing rules to be defined for Legal Entity BSV

Journal before Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

7. Balancing Segment Values to Ledger

Define Intracompany Rules for No Legal Entity

Clearing Balancing Segment Value

Journal before Posting Navigation: Journal->Enter

Journal after Posting Navigation: Journal->Enter

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