Intercompany Transfers/drop Ships/COGS And Transfer Pricing (Doc ID 1584987.1)

Last updated on SEPTEMBER 19, 2016

Applies to:

Oracle Cost Management - Version 12.1.3 and later
Information in this document applies to any platform.

Goal

Why Oracle performs different accounting for inter-company transfers and intercompany (internal) drop ships.

An intercompany transfer would be when the goods are transferred from one inventory organisation within 1 OU, to another inventory organisation in a different OU.

In this scenario (using transfer pricing), can see a break out of COGS being hit (at cost) and profit in inventory being hit up for the difference between cost and transfer price. Not sure why the intercompany COGS account that is defined in the intercompany flows wouldn't be used though, since it is an intercompany transaction.

An intercompany dropship is when OU1 creates the sales order and OU2 ships the sales order to the end customer. Using this (with advanced accounting) do actually get the intercompany COGS account being hit in the shipping org, which is great, but the logical transactions that get created at the time of ship confirm lump the whole transfer cost (so no break out to the profit in inventory account as in the intercompany transfer) into OU2's standard COGS account.

So, it seems that all the pieces are in place, all the information is set up but the accounting between the two scenarios is handled differently. Is there a way to ensure that regardless of it being an intercompany transfer or an intercompany drop ship that can get the following results:

COGS for the shipping Org is ALWAYS the intercompany COGS account that is defined in the shipping flows.
Receiving Org (logical receiving for drop ship + advanced accounting) always breaks out COGS as the cost, and profit in inventory = transfer price - COGS?

Cannot break out I/C COGS and standard COGS. Likewise, cannot see profit in inventory across the board.
 

Solution

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