In multi-subsidiary environment , some transactions may involve more than one subsidiary, impacting the accounts of more than one subsidiary. The Intercompany time and expense feature enables entry of intercompany time and expenses, and the transfer of time, expense, or both charges from one subsidiary to another.
ENABLE THE FEATURE;- Navigate to Setup > Company > Setup tasks > Enable features. On the Accounting subtab check the Intercompany time and expense feature.
After this feature is enabled, you can set the following One world preferences at Setup > accounting Preferences > General subtab:
Set allow the Intercompany time to permit the entries where the employees and customers have different subsidiaries. Set Disallow to prohibit these transactions.
Set Allow the Intercompany expenses to permit expenses transaction where the employee and customer have different subsidiaries. Set Disallow to prohibit these transactions. Set to Allow and Auto Adjust to enable automated intercompany adjustments.
HOW INTERCOMPANY CLEARING ACCOUNTING IS CREATED
After enabling the ” Intercompany time and expense ” feature Intercompany clearing account is automatically generated when the first intercompany transaction occurs.
The Intercompany Clearing Account is used to offset the transfer expenses from the originating subsidiary (Vendor’s subsidiary) to the related subsidiary(Customer’s subsidiary). The system generated account enables the balancing of debits and credits in each subsidiary.
This is an account of other current asset type. By default , it does not have an account number. You can change the name. You cannot make other changes, merge, delete, or inactivate the intercompany clearing account. You cannot create other accounts of this type.