Eliminating Intercompany Profit in Inventory

Objective

After completing this lesson, you will be able to Eliminate intercompany profit in inventory.

Eliminating Intercompany Profit in Inventory

Profit in Inventory Elimination - Data

Before we run the task to eliminate intercompany profit in inventory, let's look at the inventory and markup data that needs to be imported into group reporting. In the following image:

  • BE00 has inventory in the IPI GV Mer FS item.
  • FS Item IPI_GV_Mer is statistical. It is used to store the inventory value for the elimination.
  • The seller's (FR00) markup of 10% is contained in the IPI MR FS item.
The inventory value in fs item ipi gv merchandise is 10000. the profit in fs item ipi mr is 10 percent

The profit in inventory data shown in the image above was populated from a file. Some sample data from the source file is shown in the following code snippet:

  • In line 1, the seller is FR00, the buyer is BE00, the IPI_Rate (profit %) is 10%, and the material is P680-110.
  • In line 2, the statistical inventory value in IPI_GV_M IS 10,000.
  • In line 3, the real inventory value in FS item131200 has a value of 10,000.

Code Snippet
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1: 2;Y1;Y1;U00;2021;12;FR00;IPI_Rate;;;BE00;A000;PRC;P680-110;10;;;;;;;;YCOA;
2: 2;Y1;Y1;U00;2021;12;BE00;IPI_GV_M;;;FR00;A000;;P680-110;;10000;;EUR;;;;;YCOA;
3: 2;Y1;Y1;U00;2021;12;BE00;131200;1;915;;A000;;P680-110;;10000;;EUR;;;;;YCOA;
4: 2;Y1;Y1;U00;2021;12;BE00;111100;1;915;;A000;;P680-110;;-10000;;EUR;;;;;YCOA;
5: 2;Y1;Y1;U00;2021;12;CA00;IPI_Rate;;;US00;A000;PRC;P680-110;20;;;;;;;;YCOA;
6: 2;Y1;Y1;U00;2021;12;US00;IPI_GV_M;;;CA00;A000;;P680-110;;10000;;USD;;;;;YCOA;
7: 2;Y1;Y1;U00;2021;12;US00;131200;1;915;;A000;;P680-110;;10000;;USD;;;;;YCOA;
8: 2;Y1;Y1;U00;2021;12;US00;111100;1;915;;A000;;P680-110;;-10000;;USD;;;;;YCOA;

Profit in Inventory Elimination - Log Result

When you run the profit in inventory elimination task (2015) in the Consolidation Monitor, the log is used to evaluate the postings:

  • In sequence 010, BE00's inventory 131200 is reduced by -1.000 EUR with an offset to 412100. Since both a balance sheet and income statement item is posted, offsetting entries are booked to 317000 and 799000 via selected items.
  • In sequence 020, the impact to BE00's net income from sequence 010 is reversed.
  • In sequence 030, FR00's profit is eliminated.
  • In sequence 030 only the trigger amount in IPI_GV_M is displayed in the log. However, the following postings (1.000 EUR each) are booked to the database:
    • Dr. 41200D Clearing account - Gross margin
    • Cr. 13100D Clearing account - Gross margin B/S
    • Dr. 317000 Current year retained earnings
    • Cr. 799000 Annual net income
In sequence 010, the journal entry amount for fs item 131200 is -1000. In sequence 020, the journal entry amount for fs item 317000 is -1000. In sequence 030, the triggering amount for fs item IPI_GV_M is 10000.

Profit in Inventory Elimination - Report Result

The results can be confirmed in a report. The net income for the seller (FR00) is reduced by -1.000 EUR and the merchandise inventory for the buyer (BE00) is also reduced by 1.000 EUR.

In the report, the posting level value for fs item 131200 is -1000. In the report, the posting level value for fs item 317000 is 1000.

Eliminate Profit in Inventory

Business Scenario

At ABC Corporation, you are in the process of automating the elimination of profit in inventory. You to need to run the elimination task, and evaluate the results to make sure they match your requirement.

Note

The profit percentages and inventory values have already been imported into group reporting.

What skills will you develop in this practice exercise?

  • Report on the inventory values and profit percentages.
  • Run the intercompany profit on inventory elimination task and view the log.
  • Report on the results.

Task 1: Report Inventory Values and Profit Percentages

ExerciseStart Exercise

Task 2: Run Intercompany Profit in Inventory Elimination 

ExerciseStart Exercise

Task 3: Report Profit in Inventory Elimination Results

ExerciseStart Exercise

Configuration Project Completed!

Regina and Robert are standing next to a desk in the office

Congratulation Robert! You have successfully configured intercompany matching and eliminations with SAP S/4HANA Cloud for Group Reporting.

Use this knowledge to further enable yourself as an intermediate business consultant, and feel free to check the following link to gain further insight on the discussed topics:

Group Reporting

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