Allocate Costs to Intercompany Partners

When you use intercompany postings to transfer documents between partner companies, the VAT-related settings (primarily the VAT business posting group) assigned to the customer or vendor accounts (associated with the intercompany Partner) control whether, and how, VAT is calculated and registered. You can also do cost distributions directly from a purchase order to partner companies. For example, if you register a purchase invoice from an external vendor and you want to distribute some or all of the costs to one or more intercompany partners.

You can allocate costs can be to one or more intercompany partners using the following:

• Intercompany General Journals - These journals are useful when a service is purchased. For example, when a parent company hires a service to set up computer systems in two subsidiaries. The invoice is sent to the parent company, but the costs are allocate to the intercompany partners. For more information, see Work with Intercompany Documents and Journals.
• Purchase orders and invoices - Using purchase documents is useful when the purchasing functions of, for example, operating expenses, are centralized in one company and then allocated to the intercompany partners.

To allocate costs using an intercompany general journal

To enter a line in an intercompany general journal, follow these steps.

1. Choose the icon, enter Intercompany General Journal , and then choose the related link.
2. If required, in the External Document No. field, enter the document number on the invoice from the vendor.
3. In the Document Type field, choose Invoice.
4. In the Account Type field, choose Vendor.
5. In the Account No. field, choose the vendor.
6. In the Amount field, enter a negative amount equal to the amount on the invoice.
7. In the Bal. Account Type field, choose G/L Account.
8. In the Bal. Account No. field, choose the balancing account to use.
9. To allocate costs to intercompany partners, follow these steps:
   1. Create a new line.
   2. Leave the Document Type field, choose the option that leaves the field blank.
   3. In the Document No. field, enter a number that is different than the number in the External Document No. field. The cost allocation is considered a different transaction.
   4. In the Account Type field, choose IC Partner.
   5. In the Account No. field, choose the intercompany partner to allocate the cost to.
   6. In the Balance Account Type field, choose G/L Account.
   7. In the Balance Account No. field, choose the G/L account to which to post the amount you receive from the intercompany partner.
   8. In the Amount field, enter the amount of the invoice to allocate to the intercompany partner.
   9. In the IC Partner G/L Acc. No. field, choose the G/L account that you want to post the amount to for the intercompany partner.
   10. Fill in the remaining fields as necessary. Hover over a field to read a short description. Repeat these steps for each intercompany partner who should share in the cost.
10. To post the document and allocate the costs, choose Post.

To allocate costs using a purchase document

The following procedure describes how to allocate costs using a purchase invoice. The steps are the same for purchase orders.

Note

To complete these steps you must personalize the Purchase Invoice page by adding the IC Partner Code, IC Partner Ref. Type, and IC Partner fields. For more information, see To start personalizing a page through the Personalizing banner.

1. Choose the icon, enter Purchase Invoice , and then choose the related link.

2. In the Type field, choose G/L Account.

   G/L Account is the only option you can use to allocate costs.

3. In the No. field, choose the G/L account to post to.

4. In the IC Partner Code field, choose the intercompany partner to allocate the cost to.

5. In the IC Partner Ref. Type choose the G/L account to use for the allocation. This account will map the expense to an account in the intercomany partner's chart of accounts.

6. In the Quantity field, specify the number of units to charge to the intercompany partner.

7. In the Direct Unit Cost Excl. VAT (or Incl. VAT) field, enter the cost per item to charge to the intercompany partner.

8. Fill in the remaining fields as necessary. Hover over a field to read a short description.

9. To post the purchase order, choose Post.

To send the allocated costs to intercompany partners

1. Choose the icon, enter IC Outbox Transactions, and then choose the related link.
2. Choose lines to send, and then choose the Send to IC Partner action.
3. To allocate the costs, choose the Complete Line Actions action.

Calculating VAT for Cost Distributions

When you use a document to distribute costs to intercompany partners, there are two VAT settings to be aware of:

• The settings on the G/L account for expenses:
  • If the general business or VAT business posting groups are set up on the G/L account, then the calculation depends on the groups and the product groups from the document line.
  • If the general business or VAT business posting groups are not specified on the G/L account, the calculation depends on the following:
• The posting group settings on the intercompany partner
  • Whether the intercompany partner is assigned to a customer number that does not have a general business or VAT business posting groups specified.
  • There is no customer number associated with the intercompany partner. Then the general business or VAT business posting groups are blank, and the line in the VAT posting setup is used, which is usually a group where 0% VAT is specified.

Note

It is important to validate both the intercompany partner setup and the G/L account setup (for the expense account used for the cost distribution) before you allocate costs to intercompany partners.

See Also

Set Up Intercompany
Managing Intercompany Transactions
Finance
Setting Up Finance
Work with General Journals
Work with Business Central

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