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Allocation terms

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This article provides information about using allocation terms on a main account. Allocation terms are used to distribute amounts across multiple ledger account combinations. They help ensure that expenses or revenues are charged to the correct object in accounting.

Each allocation term that you create on a main account defines the percentage of a voucher to be allocated from a single-source main account and a combination of financial dimensions. In addition, you define the destination main account and financial dimensions where the amount will be allocated.

When you define the source financial dimension for the allocation, you can select if each dimension is specific or unspecific. Specific indicates that the financial dimension for the source transaction must match the selected dimension. When you select unspecific, it indicates that any value for the financial dimension can contribute to a match.

When you define the destination ledger account for an allocation term, you must specify the main account that you are allocating the amount to. You can use the same main account where the source transaction is posted to, or a different main account. If the same main account is used, a warning displays when saving the record. In addition to specifying the main account, you must also specify the destination dimensions. For each dimension, you can specify if you want to keep the source financial dimension value or change it. If you select no, then you must select a new value for the financial dimension. If you select yes, no additional information is specified, and the system will maintain the original financial dimensions when you post.

There is no limit to the number of allocations terms that you can add to a main account; however, the sum of the percent to allocate on an allocation term cannot exceed 100. You can create allocations for less than 100 percent if a portion of the original voucher amount should remain in the source financial dimensions. Allocations terms can be added to a main account as a legal entity override. If you are using a shared chart of accounts, allocation terms must be defined for each legal entity. To access the Allocation terms button, you must first select the Allocation check box on the Legal entity override.

Allocation term example

You have defined a cost center for your organization called CORPORATE that is numbered 000. When invoices are posted for utility expenses, they are coded to this CORPORATE cost center. Your company has defined a rule that all utility expenses should be allocated by a percentage to each of the individual cost centers. The other financial dimensions for department and business unit will stay the same.

With this example, a new allocation term would be created for the utility expense main account. One row would be created for each cost center with the percentage to be allocated. The Selection criteria for the source financial dimensions for each row would be Specific for the Cost center and the value would be set to 000: CORPORATE. For department and business unit, the Selection criteria would be Unspecific.

On the Destination ledger account FastTab, the main account will be the same utility expense account, and the Keep source financial dimensions will be set to Yes for Business unit and Department. The Keep source financial dimensions will be set to No for Cost center, and the value selected will be each respective cost center that you are allocating to. If there are three cost centers to allocate to, then three allocation terms records would be created. The only difference between each allocation term is the cost center that is specified on the destination ledger account.

Create an allocation term on a main account

  1. In the Navigation pane, go to Modules > General ledger > Chart of accounts > Accounts > Main accounts.
  2. In the list, find and select the desired record.
  3. On the Legal entity overrides FastTab, select Add.
  4. Select the Company and then select Add.
  5. Select the Allocation check box.
  6. Select Allocation terms .
  7. Select Edit to modify the default record, or select New to add a record.
  8. In the Percent field, enter the percentage of voucher transactions that you want to allocate.
  9. On the Source financial dimension FastTab, in the Selection criteria for each financial dimension, select an option.
    • If you select Specific, then select the financial dimension value in the drop-down box on the right.
    • If you select Unspecific, no additional information is required for the financial dimension.
  10. On the Destination ledger account FastTab in the To account field, select the main account where you want to allocate the percentage of the voucher transaction.
  11. In Keep source financial dimensions for each financial dimension, select an option.
    • If you select No, then select the financial dimension value in the drop-down box on the right where you want the voucher transaction to be allocated to.
    • If you select Yes, then no additional information is required. The system will keep the value on the original voucher when posting the allocation.
  12. Repeat steps 7-11 for each additional allocation. The sum of all allocations is indicated in the Total percent field. This amount cannot exceed 100.
  13. Close all of the pages.

Note

You can optionally use the Copy button to duplicate the selected allocation.

When an allocation term is created for a main account, the system will automatically post a new voucher when a voucher is posted that matches the source financial dimensions on the allocation terms.