Generating Accounting Transactions for Borrowed and Lent Accounting

Running the standard cost distribution processes in the provider operating unit identifies which transactions require borrowed and lent processing. Oracle Projects provides a separate process, PRC: Distribute Borrowed and Lent Amounts, to compute the transfer price of these transactions and determine the default GL accounts for borrowed and lent accounting entries.

The provider operating unit runs this process to perform the following steps on cross charge transactions identified for borrowed and lent processing:

  1. Calculate the transfer price amount

  2. Run AutoAccounting

  3. Create cross charge distribution lines

Calculate the Transfer Price Amount

Distribute Borrowed and Lent Amounts calculates the transfer price amount of a given cross charge transaction, as follows:

Note: If the process cannot determine a transfer price for the cross charge transaction, Oracle Projects flags the transaction with an error and proceeds to the next item. The transfer price is stored in the transaction and ledger currencies.

  1. Call the Transfer Price Determination extension.

    Oracle Projects calls the Transfer Price Determination extension at the beginning of the process in case you want to bypass the standard transfer price calculation for certain borrowed and lent transactions. If you implement this extension, Oracle Projects calculates the transfer price amount based on the extension logic and generates borrowed and lent accounting entries based on this amount.

  2. Identify the applicable transfer price schedule.

    Oracle Projects identifies the labor or non-labor transfer price schedule that you specified for the lowest-level task to which you charged the transaction. If you do not assign a transfer price schedule at the lowest task level, then Oracle Projects uses the transfer price schedule that you assign at the project-level.

    Note: You can define transfer price overrides at the assignment level. For additional information, see: Project Assignments and Defining Work Types.

  3. Identify the applicable transfer price schedule line.

    If the transfer price schedule identified by the Distribute Borrowed and Lent Amounts process contains more than one line, Oracle Projects must determine which line to apply. Oracle Projects first selects all schedule lines whose effective dates contain the Expenditure Item Date of the cross charge transaction. Oracle Projects then selects the appropriate line based on the provider and receiver organization, operating unit, legal entity, or business group.

  4. Calculate the transfer price amount.

    The process then calculates the transfer price amount by applying the transfer price rule and any additional percentage you have specified in the schedule line.

    The actual transfer price calculation is carried out like this:

  5. Call the Transfer Price Override extension.

    You can use this extension to override the transfer price amount calculated by the Distribute Borrowed and Lent Amounts process.

  6. Perform required currency conversions.

    If the functional currency is different from the transfer price basis currency, the process performs the required currency conversion to generate functional currency amounts. The conversion uses the currency conversion attributes that are defined in the provider operating unit's cross charge implementation options. You can override these attributes using the Transfer Price Currency Conversion Override extension.

  7. Call the Transfer Price Currency Conversion Override extension.

    You can use this extension to override the default transfer price currency conversion attributes defined in the cross charge implementation options.

Run AutoAccounting

After the Distribute Borrowed and Lent Amounts process calculates the transfer price amounts for each selected borrowed and lent transaction, it runs AutoAccounting to determine the default account code for each distribution line that it will create. Oracle Projects provides the functions Borrowed Account and Lent Account for borrowed and lent transactions.

If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Projects derives using AutoAccounting.

Oracle Subledger Accounting uses intracompany balancing rules to create balancing lines on journal entries between balancing segment values. You set up this functionality in the Accounting Setup Manager in Oracle General Ledger. You must also enable the Balance Cross-Entity Journal flag in the ledger definition to enable the application of the balancing rules. You must also set up the accounts to ensure that Oracle Subledger Accounting generates the balancing journal entries.

Create Cross Charge Distribution Lines

After the Distribute Borrowed and Lent Amounts process runs AutoAccounting, it creates cross charge distribution lines. Next, you generate cross charge accounting events for the cross charge distribution lines and create accounting for the accounting events in Oracle Subledger Accounting.

The PA date for the distribution lines is determined based on the ending date of the earliest open PA period on or after the expenditure item date.

You can use the View Accounting window to view cross charge distributions for a specific item. (To do so, query an invoice transaction in the Expenditure Items window and choose View Accounting from the Tools menu. See: Viewing Accounting Lines.) The following transaction attributes support cross charge distributions:

Note: Before you can view the accounting entries, you must create subledger accounting entries for the accounting events associated with the cross charge distribution lines.

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