Posting Logic and Account Determination 

Use

Additional posting lines

When goods movements between profit centers occur, the sale on the part of the sender profit center and the goods receipt on the part of the receiver profit center both need to be depicted in order for the profit centers to be treated as independent companies. As with internal goods movements without transfer prices, this view requires additional posting lines.

you need to define three additional profit and loss accounts in Financial Accounting (FI) to represent internal revenues and costs:

·         Internal revenues

·         Internal changes in stock

·         Deliveries from other profit centers

If you are using either the group or profit center valuation method in Profit Center Accounting, you can transfer the additional posting lines and values created by this to FI.

In addition, you may also need to create two further types of profit and loss accounts:

Valuation Clearing Account

If you store profit-center-oriented values in FI, you need to define a so‑called “valuation approach transfer account” to post the valuation differences that arise for business transactions between affiliated companies. When you use transfer prices, payables and receivables in FI are only posted using the legal valuation method, since the corresponding payments are made in this amount. However, if other valuation methods are stored for the offsetting account, you need to post the difference to a valuation clearing account so that it appears in the group report and that the post will have balance zero in all valuation views.

Production Variances in Exchanges Between Profit Centers

The second account type is required if you use more than one plant in the production process and the actual cost of goods manufactured differs from the planned cost of goods manufactured. This requires an additional account for the production variances so that you can settle the difference to the sender profit center. Without this account, the production variances would be settled to the receiver profit center. since a transfer price is posted for the transfer, this would cause the receiver profit center to be debited twice.

Profit center 1 produces material A in plant 1. A transfer price of USD 150 has been negotiated for material A when it is sold to profit center 2 in plant 2. The planned cost of goods manufactured is USD 100, but the actual cost of goods manufactured turns out to be USD 110. The difference ‑‑ USD 10 ‑‑ is posted to the account “Production variances” and settled to profit center 1.

For detailed information on account determination, see Customizing.

Example of Posting Logic

The following example shows the posting logic for two goods movements using transfer prices in Profit Center Accounting:

Example for a Withdrawal of a Semifinished Product

In this example, the business transaction is shown in the lowest bar. The “Value flow” area shows how the document lines appear in Financial Accounting (FI), Controlling (CO) and in Profit Center Accounting (PROFIT CENTER ACCOUNTING).

Use the following key to understand the postings:

L = Legal valuation view

G = Group valuation view

P = Profit center valuation view

 

 

 

Integration

If you are using valuation from the profit center viewpoint in FI, the additional posting lines are updated there as well.