Impact of Sales Write off amounts on Tax liability
Hi Friends ,
Did any of you had tis situation at your client ? I want to know the impact of tax liabilitry on sales write off amounts , will it reduce the tax liability if sales write off amounts or in other words the bad debts are considered for tax calcualtion. Any inputs greatly accepted,
thank you ,
I am trying to post the tax portion to the tax liability account during write-off in IS-U FICA. Is there a way I can post the tax portion on the invoice to the tax liability account instead of posting the entire amount to the expense account? Any help is highly appreciated.
Similar Messages
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FP04 : Write off and debiting Tax accounts
Dear All,
I have an issue with debiting tax account on write off.
Scenario: Invoice posted $1000 including tax of $100. i.e $900 consumption (revenue) + $100 tax.
GL Postings:
Customer account 1000 Dr
Revenue Account 900 Cr
Sales tax 100 Cr.
Write off( FP04 any reason codes).
System posts the Following:
Customer account 1000 Cr
Expense Account 1000 Dr
I need it to be like:
Customer account 1000 Cr
Expense Account 900 Dr
Sales tax 100 Dr.
I've tried everything I can, but I think I'm missing something very obvious and silly.
1) Maintained posting areas:
0120 : Expense Account (No tax code specified and tried with tax code too)
0121 : Expense Account for non tax related items (same expense account)
0122 : Tax Adjustment Flag (Tested with both flag on and off)
2) Define Act Assignments ReLU to Main Transactions
Company Division Act Deter Main Acct
1000 10 01-10 0090 Expense account
1000 10 01-10 0095 Expense account
3) ISU u2013 Define Acct Assignment Relv to Transactions
Set Main receivable account (Customer account) for all combination of 0090 and 0095. i.e. 0010 and 0020.
Company Division Act Deter Main/Sub Acct
So what am I doing wrong?
Thank you very much.
Edited by: JayUtility on Jan 31, 2012 2:53 PMThank you Ivor. Tried that too.
I'm still stuck at:
Customer (AR) Account 1000 Cr
Expense Account 1000 Dr
The entire invoice amount is debiting against the Expense / bad debt account.
I need that only the consumption portion should debit Expense account and the Tax portion should debit the Tax account.
Customer account 1000 Cr
Expense Account 900 Dr
Sales tax 100 Dr.
It seems like an easy enough thing. I must be missing something. -
Project Billing "write-off" options
I'm attempting to determine the best method of "writing off" transactions on direct projects that have been reported as billable, accrued revenue but will never be billed. Please consider the following narrative as an example:
A consultant (consultant x) charges April time and expense to project 10001 in a billable capacity (charged transactions to a billable task). The transactions are cost distributed, revenue distributed and an invoice is subsequently produced. All cost and revenue transactions are produced, interfaced and ultimately posted to the general ledger in April. The month of April is closed in PA and the invoices for the April billing cycle are produced. Project 10001's draft invoice includes those charges reported by consultant x and is distributed to the project manager for approval. The project manager reviews the invoice review and determines that consultant x's transactions will never be billed and instructs the accounting group to write off the transactions.
Challenge: we need a way to "write-off" (reduce revenue and change billing status) transactions that will allow for consistent reporting and measurement. Specifically, we need to be able to determine all write-off's (revenue/billing reductions) in a given period that relate to original transactions from an earlier or different period. In short, we want to establish a policy and procedure for consistently processing and reporting these types of conditions.
Proposed Options:
1) use the "special" non-billable adjustment option from either expenditure inquiry or invoice review to change the billing status from billable to non-billable.
Pros:
a) transactions will remain on the project in the capacity they were reported by the employee
b) an adjustment record will be created in the PA_Expend_Item_adj_Activities table which will include the adjustment activity code (i.e. Billable Reclass, Non-billable reclass, billing hold, billing hold release, etc.)
c) history of who created original transactions and adjustments is available (full audit trail)
d) a reversing revenue entry will be created in the PA_Cust_Rev_Dist_Lines_all table which will allow us to track the dates (gl period) of the revenue adjustment and compare it to the original transaction dates.
Cons:
a) to the average users the transaction on a billable task flagged as non-billable with no corresponding revenue may look unusual because there is no description explaining why the adjustment existed. the only way to determine that revenue existed and was subsequently reversed is to look at item details- revenue details.
b)The revenue write-off will be charged to the same accounts (revenue and inventory) that the original transaction was booked to but in reverse. we don't have the ability to deflect the "write-off" to a bad debt account versus a direct write-off of revenue.
c) The employee's utilization calculations will be impacted by changing the billing status of the transactions and reducing the corresponding revenue. we may need to update the utilization report to reflect these types of transactions differently.
2) use the "special" transfer adjustment option to transfer the transaction from the originating billable task to a non-billable destination task on the project in question.
Pros:
a) the average user will easily see that the transaction in question has been reversed and b) the revenue subsequently written off by the negative revenue on the reversal transaction
c) an adjustment record will be created in the PA_Expend_Item_adj_activities table which will include the applicable adjustment activity code(s) (Transfer Back-out, Transfer Originating, Transfer Destination).
d) history of who created original and adjustments is available.
a reversing revenue entry will be made via e) the negative reversal entry created in the PA_Cust_Rev_Dist_Lines_All table.
Cons:
a) the original transaction is being altered (transferred) by accounting. the integrity of the transaction as it was submitted by the source employee may be compromised.
b) there is no easy way for the average end user to know where the transaction was transferred to. the information is available via ad hoc reporting from database tables but looking at expenditure inquiry for a given project you will not be able to determine where the transaction went if it was transferred to another task and many tasks exist or if it was transferred to another project entirely.
c) The revenue write-off will be charged to the same accounts (revenue and inventory) that the original transaction was booked to but in reverse. we don't have the ability to deflect the "write-off" to a bad debt account versus a direct write-off of revenue.
d) The employee's utilization calculations will be impacted by changing the billing status of the transactions and reducing the corresponding revenue. we may need to update the utilization report to reflect these types of transactions differently.
e) As a common practice, each project will need at least one "non-billable" task to capture such write-off transfers.
3) use a write-off event (both revenue and billing) to reduce the project by the aggregate amount of all transactions in question.
Pros:
a) employee specific transactions and ultimately utilization results will not be impacted by the independent event transaction.
b) by modifying our autoaccounting rules we will be able to book the "write-off" to an account other than a revenue account. (I believe, more research necessary)
Cons:
a) No link back to actual transactions.
b) original transactions will remain untouched and will appear as though they were billed and will show up on the invoice and detail reports to the client along with an aggregated event for the total write-off amount.
Any thoughts or opinions you can provide about the best practice in Oracle will be greatly appreciated.
nullDiana,
Here's another response from a (very) senior Projects consultant. Her comments are in CAPS, so they can be dinstinguished from your comments:
"I recommend following the approach she outlines in Section 2, with the following additions:
SECTION 2) use the "special" transfer adjustment option to transfer the Transaction from the originating billable task to a non-billable Destination task on the project in question. CORRECT.
A) SET UP THE WBS TO HAVE A TOP LEVEL NON-BILLABLE TASK, ON EVERY PROJECT, WITH A TASK NUMBER OF :"WRITE-OFF".
B) WRITE AUTOACCOUNTING RULE , BASED ON TASK NUMBER, TO ENSURE THAT ANY TRANSACTIONS CHARGED (TRANSFERRED) TO "WRITE-OFF" TASK WILL BE POSTED TO A "WRITE-OFF/BAD DEBT" ACCT IN GENERAL LEDGER.
C) CREATE A DFF AT THE EXPENDITURE ITEM LEVEL WHICH CAN BE POPULATED AT THE TIME OF TRANSFER, TO INDICATE WHERE THE TRX IS BEING TRANSFERRED TO. IT IS TRUE THAT TRANSFER ACTIVITY REPORT WILL TELL YOU THIS AS WELL, BUT IF YOU
WANT TO SEE IT ONLINE DURING EXPEND. INQ, THEN DFF IS FINE.
D) AS TO CONCERNS ABOUT "THE INTEGRITY" OF THE TRANSACTION AS IT IS SUBMITTED BY THE EMPLOYEE BEING COMPROMISED, THIS IS CERTAINLY POSSIBLE, BUT IF THIS IS A SERIOUS BUSINESS CONCERN, THEN I WOULD CONSIDER CREATING AN ALERT TO THE EMPLOYEE WHO ENTERED THE ORIGINAL TRX, ADVISING THEM OF THE CHANGE AND REQUESTING THEIR REVIEW AND OR APPROVAL OF THE TRANSFERRED TRX. I CAN SEE THIS BECOMING QUITE CUMBERSOME THOUGH, AND, OVERALL, ACCOUNTING DEPARTMENTS MANIPULATE TRANSACTIONS FOR ACCOUNTING PURPOSES ALL THE TIME AS STANDARD PRACTICE, SO I'M NOT SURE WHY THIS IS AN ISSUE HERE.
E) AND LASTLY, IT IS TRUE THAT AS A COMMON PRACTICE, EACH PROJECT WILL NEED A
'WRITE-OFF" TASK AS A STANDARD PART OF IT'S WBS-- SO WHAT? IT'S JUST ONE MORE TASK IN YOUR WBS. BUILD IT INTO YOUR PROJECT TEMPLATES, AND MAKE IT NOT CHARGEABLE UNTIL WRITE OFFS BECOME NECESSARY. AS TO UTILIZATION, THERE IS NOT ENOUGH INFO IN THE CLIENT QUESTION TO ADDRESS THAT ISSUE PROPERLY.
THAT'S ABOUT IT. HOPE THIS HELPS.
BEST REGARDS, PAT"
null -
Write off process in dispute management
Can some body throw more ligght on the write off process in dispute management . Including configuration steps(t-code), level of details / AR-table affected etc.
Thanks
NikIn order to write-off dispute case appropriate confiuration needs to be done which includes assigning an "Escalation REason" to Write off a dispute case.
This means that you have an option of writing off all dispute cases with a specific Escalation Reason.
The impact of the write off would that the customer invoice is cleared and written off amount is debited to a GL account defined in the configuration. You also have the option of Cost Center to which this amount has to hit to analysis purpose.
Raj/ -
Hi Experts,
When write off is carried out, the entire amount of invoice is written off or partial based on our selection(Full/Partial).
The new requirement is
While write off, the tax amount should be posted to its own tax account instead of going to write off account.
i.e only the net invoice amount should go to write off account and tax amount should goto tax account only(if tax is credited in invoice, while write off, tax needs to be debited to tax account & vice versa)
Your valauable suggestions are appreciated.
Please forward any config document for the same.
Thanks in advance.Hi Krishna,
Your requirement is possible.
You need to assign the relevant tax code in EK02 against the write-off main\sub combination.
You also need to maintain the tax code aginst each combiantion of company code\write-off reason\division in posting area 0120.
Hope it helps
Thanks,
Amlan -
Accrual Write-off Amt in Accrual Write-Off & Accrual Recon report not tele
Hi,
Need a help here,
Oracle EBS version : 11.5.10.2
The Accrual Write-Off Amount in Accrual Write-off report does not tele with the Write-Off Amount shown in Accrual Reconciliation Report, any clues to investigate? This happens for the first time after we apply an Oracle mega patch, in the past, the amount from the 2 reports were always tele.
Thanks.You are right contains both matched and not matched records in this table.
This is a temp table only, so the actual data is populated from the po and ap/inventory tables
by the accural reconciliation build process in to this table.
This table is the staging area for managing accruals - review/write off.
If you write off the information is marked in both the temp table and also the source tables.
So next time you re-populate the temp table (accrual reconciliation build) you could wipe the temp
table and bring the data again but exclude written off transactions.
Doing mass accrual writeoff is not possible, without a customization.
Identify what happens in a writeoff and do the same using custom code.
I have designed such an application at one of my client. -
JAEHYLEE (R11i AR) Functionality of "Create Receipt Write Off"
Purpose
채권 발생분 입금 처리시 APPLY TO 에 "RECEIPT WRITE-OFF" 지정 후 AMOUNT APPLIED 에 금액 입력시 오류 발생
Symptoms
APP-AR-96983 : User Write-off limit does not exist
Cause
아래의 Write-off Setup을 하지 않았기 때문입니다
Solution
Use Receivables Responsibility.
1. Define user write-off limit
The Navigation Path is: Setup > Transactions > Approval Limit
Enter user limit for each currency the user is allowed to write off
2. Define system write-off limit
The Navigation Path is: Setup > System > System Options >
Miscellaneous (tab)
Enter Maximum Write-off Amount
3. Define receivable activity
The Navigation Path is: Setup > Receipts > Receivable Activities
Enter at least one activity with the type of Receipt Write-off
Reference
184887.1HI Steve,
A Customer and Vendor have to defined as two seperate Business Partners. In SBO 2007 the reconciliation feature has been enhanced where a Customer and Vendor could be reconciled easily.
In your case, you could use an interim G/L to reconcile Customer and Vendor. Or Create a JE crediting the Customer and debiting the Vendor
Suda -
Write-off By Reason Code Split according to Profit Centers
Hi All,
I want to know is it possible to Write-off (Reason Code Used) amount to be distributed by Profit Centers.
We have a scenario where in revenue from One customer has to be assigned to more than 1 Profit Centers.
Now if some write-off happens against this customer invoice, wie want this write off amout to be distributed among Profit Centers inProportion.
e.g. USD 100 split into 2 PC .i.e. USD 50 in PC1, and USD 50 in PC2.
Now if we receive a revenue of USD 90 and want to write-off USD 10 by reason code. We want the Write off amount to be split by Profit Centers, i.e. USD 5 should be assigned to PC1 and USD 5 should be assigned to PC2.
I believe it is Posssible By Document splitting Functionality. Is it correct? If correct what are the configuration that might need to be done or is there any other way to achieve the same.
Thanks in advance
Regards
Nitinany replies/suggestions
-
Tax relief - Bad debt write off
Hi all,
For a customer with bad debt, it appears standard practice is to use a journal entry to write the debt off to a "Bad Debt" GL account, and then manually reconcile BP balance to zero.
However, the VAT(consumption tax) for the written off amount will still be showing as owed to the government, and will still appear in the TAX report.
In the UK as in other countries, I assume there is relief on bad debt, so the VAT(consumption tax) needs to be written off as well. The only correct way I can think of doing this at the moment is doing a service type credit note with matching tax code of the original invoice specifying the bad debt GL account. In this way, the VAT will also be reversed.
Can anyone advise what method they use, or if there is a proper methodology to do this?
Thanks,
RajHi Gordon,
Thanks for the reply. So as an example, am I correct in thinking the below is the "correct way" to do a write off (if we wanted to avoid doing journal entries):
AR INVOICE - Item Type
Item A x 1 @GBP100.00
VAT/TAX @GBP17.50
-->
AR CREDIT NOTE - Service Type
Bad Debt Write Off xxxxxxxxxx (GL a/c no) @GBP100.00
VAT/TAX @GBP17.50 (assuming we specify identical tax code)
-->
Internal reconciliation to zero
Thanks,
Raj -
Write-off reason code limited to Amounts
Hi All,
We are on ecc 6.0. I want to know that is it possible to Link Write-off Reason code to amount and Roles.
The scenario is like this. We have Multiple reason code configured in SAP
Bank Charges A write-off reason code:
Cash application specialist can write-off maximum amount of USD 500 for this reason code.
If the amount is more than USD 500 it has to be written off by Role 2 which has the limit of more than USD 500.
Similarly there is other write-off reason code B for which Cash application specialist has a Limit of USD 450000 while Role 2 has a Limit gretaer than USD 450000
Assigning tolerance group to the user would not help as we have different limits for different reason codes.
How can we configure such a scenario.Will we be able to achieve the same by validations/substitutions or we can define an user exit at f-28 level. Any other way to achieve the same.
Thanks in advance
Regard
NitinThank you for your response. I haven't been able to find a way to turn it off yet, but thought someone else might have found a way.
-
Write off certain amount of AR invoice
Dear all,
I have one invoice from OM (auto invoice from OM) and our user find that 200 quantity will not charge our customer out of ordered quantity are 1000. How can I write off the 200 quantity for loss in AR?
Doesany one has idea? or alternative can handle this?
Best Regards,
AmyYou can create an adjustment for this invoice
-
Withhoding tax liability write off
Dear SAP FI GURUS
I have perfectly configured withholding tax on the system, my client requirement is that after deducting WHT from vendors they have to pay the liability to tax authority, I suggested him to clear WHT GL with fb50 in which following would happen
WHT GL Dr.
Bank GL Cr...
but he is not willing to do so, what he want is to clear that GL line item wise actually he is demanding a report which also show
how many vendors are there whoes tax liability they have paid or how many remaing.
If they have deducted WHT of 100 vendor then every vendor report should show that this amount of tax was deducted from vendor and this much was paid individually can anyone help me out of this issue.
Best Regards,Hello Mahendra,
please have a look at the following link: <a href="http://help.sap.com/saphelp_media472/helpdata/en/69/1b8c82950111d2ac740000e829fbfe/frameset.htm">Liability Account Transfer</a>
I think this describes it pretty well.
Tim -
IS-Telecommunication RMCA - FI-CA Write offs
Dear All,
This is related to IS-Telecommunication. FI-CA
Scenario: Invoice has been posted with 1121 $ including tax of 121. It means..
Customer account 1121 Dr
Revenue Account 1000 Cr
VAT on sales 121 Cr.
When I am trying to do the write off(FP04 by using reason codes). System is posting the document as below:
VAT on sales account 121 Dr
Expense account 1000 Dr
To Customer Account 1121.
I would like to transfer the total amount to the expense account instead of transfer to VAT account, if I use some specific reason codes (Like Bankruptcy).
Expected account entry:
Expense account 1121
to Customer account 1121.
I found there is a event 5070 (Write-off: Tax Special Features ) in order to meet the above requirement.
If any one knows about the requirement and solution. Please advise.
Thanks in advance
RaviHI Ravi,
path is
SPRO > Financial Accounting > contract A/R A/P > Basic functions > particular aspects of taxation procedure > tax adjustment for write offs
or
Tcode
FQZ04T
or
FQC0 and type the posting area .
thanks,
VR -
Dispute Case - Write-off entry
Dear Experts,
When we write off any invoice through UDM_AUTOWRITEOFF in FSCM, system Debits the Bad debts write off (P&L) A/c and Credits the Customer A/c. However, we want system to segregate VAT, Tax and Freight amount from Bad debts write off A/c. So that the entry would be VAT -Dr. Tax-Dr. Freight -Dr. Bad debts -Dr. and Customer -Cr. Please could you through some light on How to achieve this?
Thank you.
With Kind Regards,
Naresh B. PandyaHI Naresh,
To my understanding there is no configuration in FSCM by which you can achieve what you have stated, since we want to achieve something in FI area by doing an acitivity in FSCM, whereas vice-versa would probably work. I can possibly think of a work around. You can post a normal write-off entry giving the tax code therein, which will clear customer open item, and post to tax GL as well. Now, since the open item (document) which was "disputed object" in FSCM - Dispute case, that object will get updated with resolved object as the new document posted. Basically, the dispute case attribute will reflect the changes that has occurred in FI (FI-FSCM integration). However, I'm not sure whether this amount will get updated in field "paid amount" or "written off" amount. You can simulate and check out.
I am also interested to know how you deal with this, so keep me posted.
regards,
TV. -
application :11.5.10.2
We have received prepayment from OM through credit card payment type and it appears in our unapplied receipt register and also in our aging bucket report as credit amount against the customer.
In OM the lines are cancelled due to business reason but there is no impact on receipts and still it is showing as prepayment.
Now we want to write off those amounts from RECEIVABLES.
Can you please suggest any standard or work around process to write off ?
As a part of stardard functionality it cannot be written off as the status shows prepayment.it can be written off only for unapplied receipts.Hi,
Did you set the currency to USD?
The error message means that in the currency you are clearing in, the balance is not nil.
regards
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