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Inter-segment Sale and Purchase ? Revenue and Cost

Posted on Aug 23, 2016 at 09:04 AM 96 Views

Dear All

I have this scenario, One company code and 4 Segments.

Company Code : 1000

Segment 1 : Cycle as "S1"

Segment 2 : Motorcycle as "S2"

Segment 3 : Food as "S3"

Segment 4 : Hotel as "S4"

Plants

Segment 1 : Plant 1 as "P1"

Segment 2 : Plant 2 as "P2"

Segment 3 : Plant 3 as "P3"

Segment 4 : Plant 4 as "P4"

Detailed scenario :

S4 is the main Segment where Sales are generated i.e.

Sales Order -> Delivery -> Invoicing -> Incoming Payments

S3 segment provides food to S4, i.e. they procure vegetables, fish, chicken, meat. S3 sells these things to other customers at cost + profit, and sells these things to S4 at cost + profit.

We are thinking to use ME21N - STO, supplying plant P3 and delivery plant P4 with an extra cost handled in Condition Type, to record profit of Segment 3.

I am confused what is the standard procedure of Sale and Purchase between Segments, Financial Statements on Segment Level, when consolidated, removal of Inter-segment profit.

Waiting for your reply.

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  • author's profile photo Former Member
    Former Member
    Posted on Aug 23, 2016 at 09:10 AM
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    Hi,

    what did you describe it's very likely to Transfer prices.

    'We are thinking to use ME21N - STO, supplying plant P3 and delivery plant P4 with an extra cost handled in Condition Type, to record profit of Segment 3' - in this case you'll not get Legal reporting, that's why you need to use parallel valuation.

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    • Former Member Former Member
      Aug 23, 2016 at 04:08 PM

      Hi,

      I don't think there is an easy answer, because it's not a standard solution... Also there is a need to understand all details-processes, reports and so on.

      'When we open P/L on Segment 3 it shows accurate figures but when Company Code P/L is executed, this revenue is still shown.' - that's why I told about parallel valuation. If you need also to manage materials with different prices then it will be very combersome solution. I did something similar to it in FI-SL, but this project took about 10 months.

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