OSP Item and resource accounting impacts - SCM - Asset Lifecycle Management (ALM)(Archived)

Dear EAM Folks,
I am not able to understand that when i receive ordered material against the outside processing po's and deliver it to my sub-inventory..why i am confused with the accounting entry.How the entries happens can anybody help me on this regard?
Regards,
PA 

Functionally, it is a one-step transaction to receive a description-based item or a non-stocked inventory item into your work order, unless you have inspection. However, internally it is a two-step transaction (receipt and delivery to shop flow), and accounting entries are generated accordingly.
Receipt from Supplier:
DR. Receiving Inspection # PO cost
CR. AP Accrual
Delivery to Shop Floor:
DR. WO Valuation **
CR. Receiving Inspection # PO Cost
** You can specify the Cost Element applicable to your Direct Item by setting up Category Association.
Category Association allows you to associate a purchasing category to a Maintenance Cost Element.
For Maintenance Cost Element ‘Labor’ or ‘Equipment’, you can designate the valuation account Resource or Outside Processing.
The Receiving/Delivery process will derive the valuation account of a direct item from this. If there is no Category Association, the default Valuation Account is Material

Related

Expense Item--Accounting

For an expense item,the initial accounting entry(during receipt) is
Receiving inspection a/c Dr.
Expense AP Accrual a/c Cr.
Now, thr must be one more accounting entry to balance the Rec. inspection a/c. What is that, and whr is it defined?
Thx.
Hryzas. 
that entry will be created when you accept the component in Inspection and move it to inventory 
What is the othr a/c, and whr is it defined? 
That is the inventory account, which you define at organization, subinventory level.
during the movement of item to inventory, inventory account get debited and liability will get credited.
Thanks & Regards
Ankur Dawra 
If you are accruing on Receipt for the expense item, the first entry is what you have described. The second one that offsets the receiving account is
Cr Receiving A/C
Dr Account used in the PO distributions (if item is used expense account of that item from that organization , subinventory used with no item then expenses accoutn from there if none of these are there then the expense account from orgnaization is used in the PO distribution. If you have extended PO Account generator then it is your Expense account in the PO distribution that gets debited).
Thanks
Nagamohan 
Well, it's possible to put expense items into inventory, so the debit side of the accounting entry depends on the destination type listed on your PO.
Although, whatever you have listed on the PO it's the DELIVER transaction that creates the offset receiving inspection account entry.
Here's a link to the cost management guide that shows all the accounting entries for related transactions.
http://download.oracle.com/docs/cd/B25516_18/current/acrobat/115cstug.pdf
Hope this helps!
Jen

Accounting queries

a)From where does the Charge and Accrual a/c get populated in a PO in case of inventory and expense items? If it is an expense item, the accrual a/c does not come from the Expense Accrual Account defined in Purchasing options.
b) Where is the Receiving inspection a/c(the a/c used to offset the accrual account during inspection) defined?
c) Where is the Inventory A/P accrual a/c defined? (the account used while an inventory item is received)
Thanks 
Guess it is the Purchasing options form!! 
Also could depend on any customizations to PO Account Generator Workflow.
Accounting DFF segments could come from e.g. Employee Expense account on Employee record.
Regards,
Gareth 
Hi,
Please find the answer in the same sequence as questions are
a) All these information populated from Organization parameter, purchasing options setup. as expense accrual account gets defined in purchasing option and rest in organization parameter.
b) Recvg inventory account is defined in the receiving option, where as inspection account gets defined in the quality module.
c) Inventory accrual accounts are defined in the organization parameter while defining the organization. 
Thanks. I would like to know where exactly the receiving inspection a/c is defined. You mentioned Quality module, however, I would like to know the navigation. 
Receiving Account is defined in the Receiving Parameters of the organization. Setup-->Options-->Receing Options.
Thanks
Nagamohan 
But that is the Receiving Inventory a/c. Is it the same as Receiving inspection a/c?. If so, then why is it mandatory? Coz if we have a direct delivery, then this a/c will not be used in the first place. 
Yes, they are same (Receiving and Receving Inspection are used interchangeably).
It is mandatory becuase, for inventory purchases, you need to accrue your purchases till you pay. If a company has a long inspection periods before the goods are put in inventory, you need a way to record these purchases in accounting books. As explained by someone earlier, the account entry is between Reciving account and Accrual Account.
So irrespective of the fact you have long lead times between receiving and Delivery or not, this account is used for this account entry.
Whether you have standard delivery or direct delivery or inspection is required, you need this account.
Thanks
Nagamohan

How to interface internal requisition cost into projects?

Below are the steps that i performed. Now need to know how do I get the requisition costs into project costing.Any help is appreciated.
1)Create internal requisition for an expense item in operating unit A with project/task information and approve.
2) Run order import and create internal sales order in operating unit B.
3) Ship the item from operating unit B. ( the item is inventory item in operating unit B)
4) Receive the internal requisition in operating unit A with project information.
Now, Need to know the process of getting this internal requisition cost into projects.
Thanks!! 
Hi
You must have setup Project Manufacturing in both inventory organizations (of the different operating units).
You must have received the item into project locator within the receiving inventory organizations.
If you transfer an item from one inventory organization to another inventory organization with the same project and task on both sides, there are no cost that will be cost collected to Oracle Projects. However, if the projects & tasks differ in those organizations then run the process Cost Collector in both organizations, that will interface transactions into PA Trannsactions interface. Then run PRC: Import Transactions with the parameter of transaction source Inventory.
Dina 
Hi Dina,
Thanks for your reply. The issue is the sourcing org is projects enabled and the requisition is an expense desitnation type. The shipping org is not projects enabled. The shipping org manufactures these parts as inventory items. But these are non stockable expense items in the sourcing org and expensed to projects. Below is what we are trying to achieve.
1) Item A is set as a non stockable expense item in the sourcing org. It is an inventory make item in the shipping org.
2) Sourcing org is projects costing enabled (do not have project manufacturing). This expense item is put on an internal requisition with expense destination type to a project/task.
3) Once requisition is approved, internal sales order is created in the sourcing org.
4) Now, when I receive it in the sourcing org, do i need to have project manufacturing to get these charges to projects?
Your reply is greatly appreciated.
Thanks!! 
Well, I am not sure if I completely understand your issue/situation. By the way, what version of EBS are you running (11 or 12)? EBS has seen a decent amount of changes from 11 to 12, so have to be careful what version is being talked about. Becomes very helpful to always state what version you are running. Otherwise you may get bad responses that don't work for your version.
Bottom line, no, you do not need to use Project Manufacturing to get costs into Projects.
My reaction is to forget about the shipping organization. Focus on the Purchasing Module. When you enter project related transactions in Oracle Purchasing, you only need to enter the project information on the source document - either the requisition or the purchase order. If you enter a requisition, when you create the purchase order from the requisition, the project information is copied to the purchase order. The project information will be in the purchase order distribution lines.
The purchase order creates committed cost (not actual cost, but as committed cost).
Normally a purchase order line will be flagged to accrue on receipt (this allows the cost to be recognized in the period received, rather than in the period when the invoice is paid). You would interface receipt accrual accounting entries from Purchasing to Projects as actual transactions (and reduce the committed cost at the same time). For moe information, see "Overview of Receipt Accounting" in the Purchasing User's Guide, and "Interface Supplier Costs" in the Project Fundamentals Guide.
The Oracle Project Costing Guide has a chapter in it on integration with Oracle appliations, which includes a section on Integrating with Purchasing and Payables. So you definitely want to be reading that section as well.
Hopefully this information will help point you in the right direction.
John Dickey 
Hey John,
I really appreciate your reply. What we are trying to achieve is if we are creating an internal requisition with expense destination type, then should it show as commitment in Projects or not? By the way, we are in 11.5.10 version.
Really appreciate your help.
Thanks!! 
Hi
You could use miscelenious issue transactions from the inventory organization
Dina 
Hello,
I was able to transfer these transations into projects finally. It creates a ' logical expense requisition receipt' transactions in inventory after I receive the internal expense requisition. I had to run the cost collector in inventory and then run transaction import with the source 'inventory'.
Now, how do i transfer these costs from one project to another. I tried it through the expenditure inquiry form, where you search the transactions for that project, then go to Tools--> Transfer1 and provide the project/task to which you want to transfer. But it does not allow as the transaction source 'Inventory' is not checked to allow adjustments.
Need to know what is the process of transfereing these costs from one project to another. I believe it needs to be done in the originating responsibility.
Any help is appreciated!!
Thanks!!
Bali 
Hi Bali,
I try to transfer item into project using internal requisition (expense destination type), but it didn't work because for transaction type "Logical Expense Requisition Receipt" said transferred to project Not Applicable after i ran the cost collector in inventory.
Can you help me ?
Regards,
Dedy
Edited by: d3dy on Jul 17, 2010 6:41 AM

PJM Inventory costs in Projects

Experts,
We are facing an issue with the inventory cost recognition in Projects. We use Inventory, PJM and Project Costing. I understand default functionalality is that when material is received against a project locator in inventory, the project is charged at the time of receipt. However, the business recognises the cost against the project only when it is de-stocked - i.e. issued to the project from inventory.
A smaller issue is the value of the cost. Currently, it shows the PO value on the project; whereas the business considers the de-stocked cost, using average costing, as the true measure.
Any suggestions on the options towards achieving the desired functionality will be appreciated.
Thanks 
Hi
You may purchase the items for Inventory destination, without entering a project and task on the distribution line.
Items will be received into a non-project locator. At this moment no project is charged, and the value of the PO receipt transactions is debiting the Materials inventory valuation account.
Later on, when you need to issue items to a project, you will use a transaction type which is project-related. The issue item to project transactions will be cost colected, and you will get expenditure items in Oracle Projects Costing. The value of those type of transactions is quantity multiplied by average cost.
Note: for that scenario you don't need PJM.
Dina 
Thanks for your response, Dina.
However, the requirement here is to hold inventory against a specific project. One of the key reasons for using PJM is the ability to hold project inventory. 
Hi
When you receive items from vendor into project locator the cost are collected into Oracle Projects.
Your requirement is not clear, would you like cost of material will not be interfaced to Projects or do you want to affect the GL accounting.
You may configure the GL accounting sent by Inventory to GL, and still interface costs to PA upon receiving.
Look at Accounting Generation Extension (if you are on 11i) or setup the accounting rules in SLA (if you are on R12). The accounting rule should be based on the type of inventory transaction. source and actions. When you receive items from vendor debit a general inventory valuation account. When items are issued from inventory to a project, credit that account and debit a GL account "Project recognized cost".
However, I can't see a simple solution to prevent costs from being interfaced to Projects upon receiving, and sending cost to Projects upon issue from Inventory. You might be able to develop a customization for that, but I can't see an easy way to perform that.
Dina

no subinventory on PO but able to receive it!

Hello friends, we are using R12 with Projects and PJM. We have only one Inventory Org apart from IMO.  I created a purchase order for a stockable item with Project and Task on the PO distribution and destination type Inventory. I forgot to put any subinventory info on the PO distribution line. Approved the PO and received it in Reciepts window. I can see this in Receiving Transaction window now but don't see an inventory transaction in INV module in Material Transaction window.  I realize that there is no subinventory assigned on the distribution window for the PO. However, the received quantity shows 10.Question is, where in inventory did system put this 10 qty ? How and where do I see it?FYI: I wanted to get these 10 qty into non-expense inventory and then issue to project via account alias Miscellaneous Inv Transaction.  Any help is appreciated.Thanks
My bad, those items were in "Receiving"  sub. So I went and did the receiving transaction with correct subinventory and now I have the qty 10 in my Assett sub. The PO line was flagged "Accrue at Receipt" so I waited for the Cost Manager to kick in which it did after a while and costed my transaction. I could now see the inventory movement in "View Material Transactions"  screen. It was "Costed" = yes but the Transferred to Projects was flagged as error. Error message was "System failed to arrive at the first subelement ...." . I googled it and the solution was to populate the field "SubElement' = Material as a default subelement at organization level. Understood that when the system was trying to bring in the Inventory destination receipt to projects , it needed POET. P/T were identified on the PO , Organization is taken from where the PO is received but there was no place where Expenditure type was identified during the ordeal. In case of expense destination, system requires inputting expenditure type on the PO distribution but for inventory destination it doesn't.Now, when the cost collector ran, it picked up the transaction and put it in the pa_transaction_interface table. Next ran the transaction import which failed becasue of missing system linkage for exp type Material and Exp class Inventory.  I went ahead and defined one in expenditure types.The question I have is, by defaulting "Material" as the default cost subelement at org level am I calling for more troubled transactions elsewhere?Also, if I understand this correclty, by defining a new exp type Material and classifying it for Inventory do I need to do any other setups? I believe transaction source "Inventory" comes to PA as costed and fully accounted i.e. GL gets hit from INV not PA.Please help me identify anything above that requires further setups or is outright unusually wrong.ThanksAC
while attaching one Expenditure type to sub element Material, Only the expenditure types with Expenditure Type Class "Inventory" will be populated. here make a note that When we transfer the cost to project from Inventory, system will interface the inventory cost with the attached Expenditure type only but not the Inventory/Sub inventory Item A/c

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