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17

Cross Charge

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Objectives

After completing this lesson, you should be able to do the


following:
Describe the use of borrowed and lent processing for cross
charged transactions
Process borrowed and lent cross charges
Define borrowed and lent implementation setup steps

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Agenda

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Overview of Cross Charge


Process Borrowed and Lent Cross Charges
Implement Borrowed and Lent Cross Charge Processing

Copyright 2010, Oracle. All rights reserved.

Overview of Cross Charge

Provider Organization

Receiver Organization

Expenditure Organization:
Services-East

Task Organization:
Cleveland Mfg

Example: Timecard

A cross charge is the act of entering a transaction


where the expenditure organization and the task
owning organization are different.
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Cross Charge Terminology


Cross Charge Terminology
Borrowed and Lent
Cross Charge
Cross Charge Transaction
Cross Charge Type
Intercompany Billing
Provider Operating Unit
Provider Organization
Receiver Operating Unit
Receiver Organization
Transfer Price

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Cross Charge Types Example


United
States

US
Services

Inter-Operating
Dallas

IntraOperating
Unit

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Unit

Denver

Business Group

US
Corp.

Legal Entities

New
York

Operating Units

Intercompany

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Cross Charge Types

Processing Methods
Borrowed and Lent Accounting
Inter-operating unit and intra-operating
unit cross charges
Intercompany Billing Accounting
Intercompany and inter-operating unit
cross charges
None: No Additional Processing
Intercompany, inter-operating unit, and
intra-operating unit cross charges
Processing methods and the cross charge
types with which you can use them
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Quiz
Which of the following is not a cross charge transaction?
a. Intercompany
b. Interproject
c. Inter-Operating Unit
d. Intra-Operating Unit

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Agenda

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Overview of Cross Charge


Process Borrowed and Lent Cross Charges
Implement Borrowed and Lent Cross Charge Processing

Copyright 2010, Oracle. All rights reserved.

Borrowed and Lent Processing

Legal
Entity

US
Services

Dallas

Lent To

Denver

Operating
Units

Borrowed From

For example, the Denver (Provider) Operating Unit


owns the resource and the Dallas (Receiver)
Operating Unit owns the project.

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Project and Task Setup

Project

Task 1

Task 1.1

Task 2

Task 1.2

Task 2.1

Task 2.2

Define whether to allow charges from other operating units


and specify whether to process labor and non-labor cross
charge transactions.

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Subledger Accounting Process Flow: Cross


Charge
Enter or import cross charge transactions
Distribute costs of cross charges
PRC: Distribute Borrowed and Lent Amounts
PRC: Generate Cross Charge Accounting Events
PRC: Create Accounting
PRC: Transfer Journal Entries to GL (optional)
Journal Import (Oracle General Ledger)
Processing flow for cross charges (provider operating unit)
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Borrowed and Lent Accounting


Process

Accounting

Debit (DR)
Credit (CR)

Amount

Cost

Labor Expense
DR
01-490-5020-000

500.00

Cost

Labor Clearing
CR
01-000-2410-000

500.00

Borrowed and
Lent

Lent
DR
01-422-7050-000

2,000.00

Borrowed and
Lent

Borrowed
CR
01-490-7050-000

2,000.00

Example of Borrowed and Lent Accounting

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Cross Charge Adjustments

Perform
adjustments

Reprocess cross
charges

Use the Expenditure Items window to


perform cross charge adjustments.

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Processing Cross Charge Adjustments


Mark a cross charged transaction for
reprocessing

Run PRC: Distribute Borrowed and Lent


Amounts

Recalculates
transfer price

Reconverts
transfer price
amount

Regenerates
accounting
entries

Reverses
existing
distributions

Processing adjustments to borrowed and lent cross charges

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Quiz
The borrowed and lent processing method creates accounting
entries to pass costs or share revenue between the provider
and receiver organizations within a legal entity.
a. True
b. False

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Quiz
The ___ program uses AutoAccounting to determine the
default credit account and then to generate accounting events.
a. PRC: Distribute Borrowed and Lent Amounts
b. PRC: Generate Cross Charge Accounting Events
c. PRC: Create Accounting
d. PRC: Transfer Journal Entries to GL

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Agenda

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Overview of Cross Charge


Process Borrowed and Lent Cross Charges
Implement Borrowed and Lent Cross Charge Processing

Copyright 2010, Oracle. All rights reserved.

Borrowed and Lent Cross Charge Processing


Implementation Steps
Step

Required?

Setup Level

Define transfer price rules

Yes

Site

Define transfer price schedules

Yes

Site

Define cross charge implementation


options (for all operating units using
borrowed and lent processing)

Yes

Operating Unit

Define provider and receiver controls

Yes

Operating Unit

Define accounting for borrowed and lent


transactions

Yes

Operating Unit

Implement cross charge client extensions No

Site

Borrowed and Lent Cross Charge Implementation Steps

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Transfer Price Rules


Cross Charge
Resource

Project

Provider

Receiver
Transfer
Price

Credit

Debit
Borrowed and
Lent Processing

Transfer price rules determine how Oracle Project Costing


calculates the transfer price for cross charged transactions.

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Transfer Price Schedule

Provider

Receiver

Services-East

Cleveland Mfg

Labor Rule = Cost + 50%


Non-Labor Rule = Cost + 25%

Specify which rules determine the transfer price amount


for transactions charged from a provider organization to
a receiver organization.

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Cross Charge Implementation Options

Cross Charges within


Operating Unit

Cross Charges to
Operating Units with
in Same Legal Entity

Allow?

Default Processing Method

Default Processing Method

None

None

Borrowed and Lent

Borrowed and Lent

Select default processing methods and transfer


price currency conversion options.
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Provider and Receiver Controls for Borrowed and


Lent Accounting

US
Services

Dallas

Denver

Legal
Entity

Operating
Units

Allow Cross Charges


Borrowed and Lent Processing
Define Provide and Receiver Controls to control cross
charging and to override default processing methods.
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AutoAccounting Rules for Borrowed and Lent


Transactions

AutoAccounting Function

Business Activity

Borrowed Account

Determines default borrowed account,


which is the credit side of the
borrowed and lent transaction

Lent Account

Determines default lent account, which


is the debit side of the borrowed and
lent transaction

Implement AutoAccounting to generate default borrowed


and lent accounts.

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Implement Cross Charge Extensions


Client Extensions for Borrowed and Lent Cross Charges
Provider and Receiver Organizations Override Extension
Cross Charge Processing Method Override Extension
Transfer Price Determination Extension
Transfer Price Override Extension
Transfer Price Currency Override Extension
Define extensions to further enhance borrowed and lent cross
charge processing.

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Quiz
You need not define transfer price schedules at the site level to
implement borrowed and lent cross charge processing.
a. True
b. False

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Summary
In this lesson, you should have learned how to:
Explain the cross charge processing methods
Enter and process borrowed and lent cross charges
Implement borrowed and lent cross charge processing

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Copyright 2010, Oracle. All rights reserved.