Intercompany profit in inventory

Hi, we are on a manufacturing business and im trying to explore the system for ways and means to monitor and track the IPI (intercompany profit in inventory) resulting from intercompany sales. This is the elimination from the inventory account (Balance Sheet aspect) of any profit or loss on the intercompany sale that has not been confirmed by resale of the inventory to outsiders (non-affiliate).
We are using SEM-BCS (trading partner and partner profit center fields) for the process of eliminating the intercompany profits and loss on the Income Statement aspect.
Appreciate your expertise and inputs on this.
thanks and regards,
jing

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.
Regards,
Eric

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Auto-elimination of intercompany profit in inventory - how to eliminate IC balance via rules?

Hi Experts:
I’ve designed and developed a data form in HFM to calculate the amount of MARGIN in the inventory of the receiving company (when the receiving company has received the inventory from an intercompany partner).
Does anyone have any experience or ideas how to write a rule (or use IC logic) to automatically eliminate this calculated amount against IC Cost of Sales?
The IC Cost of Goods sold entry will be the same at the margin in inventory (but this is not broken out separately in any account – just buried in COGS).
Does anyone have any suggestions for a rule/account/IC logic that could automatically grab this calculated balance in inventory and remove it from inventory as well as reduce IC_COGS?
We prefer to do this elim entry automatically if possible.    Is it possible to do an “auto” journal entry that could grab these amounts?    Or could we use a rule to populate an IC account so that this would self eliminate?
Should we set up an elim account part and populate them automatically via rules, then allow HFM to use it's built in IC elim logic?   This issue is that this entry occurs all on one entity, but I know it's possible to set up IC accounts so that you can book a balance with yourself.
How do I do this elim entry automatically in HFM?
Inventory
$    (1,000) this will be calculated in HFM.
IC_COGS
$      1,000   this will equal to above account
Thanks,
Mark

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.
Regards,
Eric

ECCS - Intercompany Profit Elimination of Inventory Transfers

Hi Consolidation Gurus,
We are trying to eliminate intercompany profits on inventory transfers. We are using the Additional Financial Data and created Product Groups like Machines, Parts etc. How complicated is it to use Reported Financial Data? Is it possible to get profit elim at each item level?
How do we go about doing the profit elim? Could somebody explain in detail how the intercompany profit is set up(customising) and how exactly it works? What are the steps involved in setting it up? Also, how do we use the flexible upload file? Is there any format for uploading this?
Any help would be greatly appreciated.
Thanks.
SV

We are going to implement SEM-BCS - So i wanted to know the details of interprofit elimination in detail during the blueprinting process.
Traditional R/3 for inter company transactions is you create one account for each CC and check that account to see the amount that's due from that CC
With Trading partner functionality, you will be having one single account for all transactions with all the Co Cds and if you want the balance of a particular Co Cd, you do it with by checking the A/C and the Trading Partner(Company ID).
Am i correct in saying so ? Correct me if i am wrong anywhere.
How would things be taken care in BCS? is what i wanted to know.
Thanks,
Nandita

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

How to cost intercompany in-transit inventory

Hi-
I am not very famaliar with MM, I usually am FI. I have a question about doing an intercompany transfer of inventory from one company code to another - US to Canada. We are doing a STO that moves it. When the transfer happens, I can see in my accounting documents that it is coming out of the US inventory.
It is going to a In Transit inventory location. I was expecting to see the value of the inventory also being recorded on the receiving company but I don't see it until the receipt is made in Canada.
Have I missed something, why don't I see this inventory cost being picked up in the receiving company. Thanks.

Hello,
From what i see you are using a 2 step STO process and hence its normal to see the inventory in trasit till the receiving plant does a GR.
However if your requirement is to see a accounting document immediately you should use a 1 step STO process where the GI from the sending plant will create a GR in the receiving plant. This is recommended only if the plants are located close to each other. In your case as the transfer is across 2 countries, it is bes that you use the 2 step process.
Hope this clarifies.
Regards,
Jimmy Ambooken

Profit centers inventory groups

If Profit centers are created, can they be assigned to inventory groups?

Hi,
Please check Note No. 909342.
Kind regards,
Jitin
SAP Business One Forum Team

Intercompany profit elimination

Hi,
My client is using T-Code cx50 to manually post intercompany transactions. Currently 370000 (I/C Sales) eliminates against 470110 (Cost of sales) and is automated.
My question is
1) where can i see this automated process?
2) How can i setup automated process for the account 112097(I/C Inv.deffered) elimination against 209055 (I/C deff. revenues)
Any response is appreciated.
Thanks in advance...
Vijay.

Hi,
The transaction code which youhave mentioned(CX54) is for interunit elimination, but my question is to automate the postings in consolidation.
I have defined a method in the T-Code CXE7 and my question is how to automate this process if there are some profitcenters attached for the accounts.
How to include the profitcenters while automating the process.
Any response will be appreciated.
Thanks & Rgds,
Vijay.

BCS Elim Inventory Profit Setting

Does anyone know what the setting 'Fiscal Year of 1st Execution' in the Elim Profit on Inventory Task does? Or, why is it required?
Thanks
Tim

Hi Amit,
It should be a manual task.
The information for the system to calculate the profit is provided manually at every consolidation frequency through data collection task.
For the supplying company, you have to maintain the profit percentage on the stock transfer that happens with the corresponding partner company. If there are many different products, you have to maintain this for each product and for each partner company.
For the inventory managing company, you have to maintain the closing book value for each product for each supplying company.
With this information, the system can calculate the profit on the closing stock for each of the partner companies.
Hope it is clear now. Please revert if you have more questions.
Regards,
Michael

SEM-BCS Journal Posting for Elim.inventory

Hi,
I have setting for Elim.inventory as below :
In menu "posting item", I set "Finished Good" as an inventory item. And in the folder "Offsetting Item", I set "Net Sales" for debit side and "COGS unrealised profit on inventory" for credit side.
After that,
I input AFD for inventory managing unit (cons unit AA) => book value = 300 USD
for Supplying managing Unit (cons unit BB) => Gross Margin=25%.
Then I execute tas for Elim.inventory.
It create journal as follow :
Dr Net Sales 75
Cr Finished Good 75
Dr B/S current Year Profit 75
Cr P/L current Year Profit 75
Is that journal correct? because my accounting user said that it should be as follow :
Dr Net Sales 300
Cr COGS unrealised profit 225
Cr Finished Good 75
The other question is :
How to set the "freight cost" ? and what are the journal like ?
Thanks in advance

For the sake of truth:
your entries also were correct (and even more correct than I proposed).
See some additional info in this thread:
How unrealised sales is handled by SEM - BCS?

MB11 & MBST accounting document ledger view wrong profit center

Dear Friends,
My user is trying make a stock correction from stock 0001 to 0003 (storage location) from MB11 transaction with movement type 411 E (with special stock indicator E).
Every thing is fine but when we look in to accounting document in entry view the entry is as below.
Offsetting account (GBB) Credit (posting key 91) - with no profit center
Inventory account (BSX) Debit (posting key 89) - With profit center ABC
When we look in to ledger view of the above document the entry showing is as below.
Offsetting account (GBB) Credit (posting key 91) - with Z_SPLITT profit center
Inventory account (BSX) Debit (posting key 89) - With profit center ABC
Zero Balance account (posting key 50) - With profit center ABC
Zero Balance account (posting key 40) - with Z_SPLITT profit center
When I looked in to the configuration of document splitting I can see the below settings.
1) Document splitting Characterostic for General ledgers - set on Profit center (Mandatory field)
2) Zero Balance Posting account is maintained
3) Constant for Document Splitting - Z_SPLITT profit center is maintained
Also for testing I posted the document from FB01 transaction code with the below entry.
Account XYZ - Debit - with no profit center
Account ZYX - Credit - With ABC profit center.
In the ledger view I can see the below entry.
Account XYZ - Debit - With ABC profit center.
Account ZYX - Credit - With ABC profit center.
Then why this is not happening when my user posting the docuemnt from MB11 & MBST?
Why the offsetting account (GBB) line item not copying the profit center (ABC) of line item of inventory account (BSX)?
also why zero balance account with Z_SPLITT account entry added?
Is the functionality is like that only or any thing in configuration or transaction level is missing?
Please guide me for the same.
Many Thanks in advance.
Best Regards,
Abdul Mazid

We had the same problem.
Make Profit Center field as Optional for Movement type 411/411E/412/412E in Transaction Code OMJJ. This worked for us. After this setting was changed the profit center from the material master was used for the movement.
We still have rules that make profit center mandatory on the FI side so profit center is not really optional.

Profit center valuation in material master

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.
The other thing about material ledger is that you need to have a standard cost estimate so that material ledger can keep track of the cos component structure. The way it works is as follows:
Say the standard estimate shows labor=$100, materials=$200 and overhead=$300 for a total cost of $600. All transactions in the month using this material use the $600 standard. Now, when material ledger is run at month end, the PUP (periodc unit price) is calculated and let us assume the PUP values are labor=$150, materials=$250, overhead=$350 for a total PUP of $750. Material ledger already has tables with the details of the standard components against every transaction. Now it will apply the remaining adjustments totalling $150 to the proper cost components for COPA purposes. This is pushed to COPA using transaction KE27. Think of it like this...Actual cost is equal to standard ($600) plus/minus variances ($150).
Therefore, you always should have a standard cost estimate when using material ledger. At least that is my usage and understanding. I hope I provided useful information for you in some way.
David

Intercompany invoicing for Service

Hi All,
Need help to setup intercompany invoicing for service items. Standard intercompany flow support inventory items but service items are not inventory items and we dont want to use projects for cross charging that will be overkill. Is there any way that we can handle this.
BR
Sachin

Thread closed

Company code consolidation impact to BW

Hello,
Our company is going to consolidate 2 company codes. The data in ECC will be changed at the database level. the question is how do we sync up BW? Do we have to do reloads of all the data? This is a huge effort and risky with the LO extractors. what are some best practices?

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:
1) Intercompany eliminations (eliminations for Acct Receivable/Payable)
2) Elimination of Intercompany Profit & Loss in transferred Inventory
3) Consolidation of Investment.
Would appreciate if you could throw some light on EC-CS and the basic configurations required for Consolidation.
Regards
Sandeep GHAG

How unrealised sales is handled by SEM - BCS?

Hi all,
For intercompany transferred of inventory at profit, there are two elimination involved:-
- Unrealised Sales
- Unrealised Profit & Loss
In SEM BCS, elimination of unrealised profit & loss is handled by IPI. How about unrealised sales?
Many thanks.
Regards, Renee

Renee,
You cannot post directly to clearing items. That's why you get the error. The only possibility is to do it with reclasses on 01-10 level of postings without the doc type assigned.
But you don't need it. AFAIU, you try to make entries for unrealised profit in inventory? Then the entries you make should be as following:
DR COGS (or any other cost/expense account) in P&L
CR Inventory (B/S)
The system will automatically add:
DR Clearing item in B/S
CR Clearing item in P&L
It's how the clearing items work.
For an example of this functionality (maybe it'll help you to configure it properly) see here:
Re: SEM-BCS Journal Posting for Elim.inventory

Just my own curiosity on Legal Consolidation

Hi Everyone,
Iu2019m curious and hope to see some good feedback here.
How many people actually know and have experience performing legal consolidation with BPC.
Anyone in America?
Anyone with BPC 7, Microsoft or Netweaver?
Thanks for your feedback, I'm sure many other are curious about this.
Fletch

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?
If certain assumptions can be made, you could eliminate the 'imbalance' of COS and sales to the inventory account.
Also now if Company B sells 80 units of Product X, 50 of which are from the ones supplied by Company A while the remaining 30 are bought from somewhere else. So now company B is left with 50 units of Product X (that was bought from Company A) valued at $100 (when its actually $50). How do we evaluate inventory in this case (remember there might be hundreds of such transactions happening in the company, multiple products being bought from multiple inter-companies at different prices)? How do we eliminate the Inventory profit because of stock transfer? How do we track all these stock movements?
In cases such as the above, I would rely heavily on using movement types to track stock transfers. You then have the option of using formulas. An alternative would be to (a) store the profitablilty of the products in the system, (b) pull down the requisite movement types into an excel template within BPC, (c) let excel calculate the appropriate profit to be eliminated (d) send these profit figures to the system to actually perform the elimination.
The above are just different ways of thinking about/tackling the issue. You would have to test it out!
All the best
Tara

Intercompany profit in inventory

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