Intercompany Profit eliminations

Hi Experts
I am working on intercompany profit elimination and trying to understand how it works.
We have implemented intercompany profit elimiation for US and trying to work for other countries. My client is using Dual costing for materials to record profit made in intercompany and later to eliminate (I/C profit elimination) at month end.
Can any one explain how does this work ?
Thanks
Deepa

Hello Deepa! I too am just beginning to work on our intercompany profit elimination techniques using 4.7 in SAP and Material Ledger actual costing. We previously set up 3 currencies. The currencies are as follows:
10 - Called Local currency. this currency will include the profit in the cost estimate and std of the transferred parts.
30 - Called Group currency. This one is a straight conversion to the group currency (if different) at the exchange rates provided in the rate table.
31 - Called Group at Group. This currency is expected to provide the cost estimate standard cost of all inventory without the extra profit layer.
So, we have a couple of things that must happen. We need a layer within the cost estimate that gets picked up in currencies 10 and 30, but not in 31. I believe this behavior is handled by the way the layer is created. If we use Additive Costs, the Accounting department would add the profit layer to the cost estimate for the normal costing variant. We would not apply an additive cost layer for the other costing variant that applies to the 31 currency. The other thing is that we then need to find a report that shows the currencies with (30) and without (31) intercompany profit layer. This report will show us the remaining intercompany profit layer in inventory which should be eliminated.
That is the basic strategy we are going to test with. Another way we plan on adding the layer is to use Purchasing Information Records (PIR) - Pricing Conditions. If we can get the PIR pricing conditions to work as described above using Additive Costs, we can hand off the daily maintenance to the purchasing side of the organization. This is just another option to explore.
If you have arrived at any additional epiphanies, please let me know.
David

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http://help.sap.com/saphelp_nw04/helpdata/en/d5/784d3c596f0b26e10000000a11402f/content.htm
http://help.sap.com/saphelp_pserv463/helpdata/EN/42/ce5e3891ccb657e10000009b38f889/content.htm
http://help.sap.com/saphelp_banking463/helpdata/en/5c/c1c713445f11d189f00000e81ddfac/content.htm
Do not forget to assign points if the answer is helpful. It's the way to say thanks in SDN.
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Hi. Try this. Tag it as an intercompany account (use Y instead of R) and give it a plug account. Put the plug account within COGS. Basically you're doing a one-sided elimination.
Elimination of profit in inventory is not easy, and if this solves things for you then you're on the easy side of it.
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Hi,
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Intercompany Profit Elimination
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At the outset, let me say that we did not have to do Intercompany profit elimination on this project. But my BPC mentor had a few suggestions.
The scenario is company A produces 100 units of Product X for $100 ($1 per Product X - Cost of Sales) and sells it to Company B for $200 with mark up price ($2 per Product X u2013 Sales). Now Company A has sales of $200 while Company B has COS of $200 which will be easily eliminated by intercompany elimination. But now Company B has $200 worth of Inventory (Assets) when it should be actually only $100 thus inflating the assets. Is there a business rule to eliminate inventory/asset of this kind?
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Does anyone know the table where the profit center valuation standard is stored. In MBEW I see the legal valuation standard but not the profit center valuation standard.

I can give you some information but not everything. I have gone through the deployment of material ledger using 3 valuations, but not the ones you are using. We used Local, Group and Group at Group. All 3 are at actual costing. What this means is that the local currency is the currency in the country where the plant exists. The group valuation is a straight conversion to US dollars from the local currency based on the currency conversion tables M and P rates. Note that both of these first two currencies can include intercompany profit if reflected on the transferring sales order between companies. The Group at Group is the US dollar conversion without the intercompany profit. We find this works for our business.
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Ram

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https://www.sdn.sap.com/irj/scn/go/portal/prtroot/docs/library/uuid/b026be43-40cf-2b10-6cae-ed8900ace7f9
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Hi Rajiv,
Thanks for your prompt response, I just need to understand that by using Special GL functionality can I avail the following attributes in Consolidation:
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Edited by: HARI on Feb 20, 2011 6:53 AM

Hi Christian ,
Thanks for the earlier answer. Again i have some questions.
I have successfully created FGI0 reports with 4 company codes and getting the reports based on the FSV. here i am facing the anothre issue for getting a consolidated reports of all the company code in the next colum
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Regards
Hari

Intercompany Profit eliminations

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