Parts and Service profit

determination during
Service Order
Agenda

• Standard accounting Flow

• Customer’s expectation
• Options
SAP standard Accounting Flow
SAP standard Accounting Flow
Pros and Cons
Customer’s requirement :
    Parts        Service  
                 
  Parts COGS Dr 10     W/S Inventory Dr 12
  Parts Inventory Cr 10     A/P intra co Balance sheet Cr 12
parts issued to services                
  A/R Intra Co Balance Sheet Dr 12        
  Intra co. Rev parts Cr 12        

                 
                 
            Service COGS Dr 12
            W/S Inventory Cr 12
Billing to Customer                
            Accounts Recv Dr 20
            Revenue Parts (customer) Cr 20

                 
                 
  Intra Co. Rev Parts Dr 12        
  Parts COGS Cr 10        
Intra company Elimination   Service COGS Cr 2        
               
               
SAP Proposal – Option 1
Option -1
Pros and Cons
SAP Proposal – Option 2
Option -2
Pros and Cons

 Extra / Lengthy efforts by both profit segments to record Intra company Sales Purchase; within a
company need to create below documents:
 Sale Order
 Purchase Order
 Post Goods Issue
 Goods Receipt
 Invoice(s) w.r.t Sales Order(s)
 Invoice(s) w.r.t Purchase Order(s)

 Need to segregate Plants; separately for Parts & Services to valuate the same material number
with different values.

 Need to put extra efforts for Reconciliations b/w Intra company transactions

 Need to develop Application to Eliminate Intra Company Revenue & COGS Profit Center
Adjustment

 Efforts required from Business to validate the application results.