1. Enable the LCM flag in inventory organization parameters and define the LCM Variance account.

2. Define the LCM accounts in Receiving options 

3. Enable the Pre-Receiving flag if required depending on the business requirement.

Navigation: Purchasing responsibility > Setup > Organizations > Receiving Options

4. Define the Organization Access to the inventory organization which is enabled for LCM for the responsibility 'Landed Cost
Navigation: Inventory responsibility > Setup > Organizations > Organization Access

5. Define the Cost Factors in Purchasing which will be used as charges in the LCM Shipment. Based on the allocation basis (qu
Navigation: Purchasing Responsibility > Setup > Purchasing > Cost Factors

6. Define the LCM options, Shipment line types and Shipment types in LCM workbench

7. Associate the default Shipment line type to the Shipment type in LCM workbench

8. Define the Party types allowed, Party usages allowed and Source types allowed for the Shipment types defined in LCM wor

9. Define the modifiers in Advanced Pricing for the charges that need to be used in LCM shipment. This setup shows whether
Navigation: Purchasing Responsibility > Advanced Pricing > Modifiers > Modifier setup

10. Define the following Landed Cost Management profile options

INL: Default Currency Code for QP Charges Generation

INL: Default Currency Conversion Type for QP Charges Generation
INL: Default Shipment Type for Open Interface

11. Define the following QP profile options at Landed Cost Management responsibility level
QP: Blind Discount Option = Yes
QP: Licensed for Product = Purchasing
QP:Item Validation Organization = <Set the item master organization>
QP:Pricing Perspective Request Type = Purchase Order
QP:Pricing Transaction Entity = Procurement
QP:Source System Code = Oracle Purchasing 

Generate Charges
102639
Doc id 1278784.1 For profile option 102640
QP: Pricing Transaction Entity
QP: Source System Code
Request: Build Attribute Mapping rules

Check the following:

a) QP Profiles:
PROFILE                               VALUE              LEVEL
QP: Blind Discount Option             Yes                LCM Application
QP: Licensed for Product              Purchasing         LCM Application
QP: Pricing Perspective Request Type  Purchase Order     LCM Application
QP: Pricing Transaction Entity        Procurement        LCM Application, and User
QP: Source System Code                Oracle Purchasing  LCM Application, and User
b) In QP Modifiers, "Pricing Phase" should be "PO: Line Charges" or "PO: Charges: Header/All Lines". If th
c) In QP Modifiers, "Automatic" flag should be marked;
d) In LCM Profiles: "INL: Default Currency Code for QP Charges Generation" should be the functional curre

3. Ensure the NEED_BY_DATE has been set:

select NEED_BY_DATE
from PO_LINE_LOCATIONS_ALL
where LINE_LOCATION_ID = &line_locid;

Make any necessary changes from above then bounce application (and database if necessary).
onsibility 'Landed Cost Management' without which the organization will not appear in the LOV of LCM workbench.

the allocation basis (quantity/value/weight/volume) and pricing basis (per unit or fixed amount or % of line price) defined for the char

ypes defined in LCM workbench

his setup shows whether the charges need to be applied at PO line level or header level and the rate at which the charge allocation shou
 305268
http://oracle.anilpassi.com/oa-framework-tutorials-training.html

ader/All Lines". If these values aren't available, review profiles "QP: Source System Code" and "QP: Pricing Transacti

the functional currency, or, for others currencies, a conversion rate should be recorded in "Daily Rates" form (Setup
ne price) defined for the charges in the Cost factor page, the allocation of amount to the charges will be decided.

ch the charge allocation should be done.

nd "QP: Pricing Transaction Entity".

"Daily Rates" form (Setup->Currency->Rates->Daily) using Conversion Type defined in "INL: Default Currency Conv
L: Default Currency Conversion Type for QP Charges Generation" profile.
A. F. FERGUSON & CO. 
Chartered Accountants
Ibrahim Fibers Upgradation Project

LCM Data Required From IFL

A- Which Organization should be LCM Enabled. It will increase 1 step in receiving.

B- Accounts
1- LCM Variance ACCOUNT
2- Landed Cost Absorption Account
3- Invoice Price Variance Account
4- Exchange Rate Variance Account
5- Tax Variance Account
6- Default Charge Account

C- Naming Convention
Cost Factor Names
Shipment Type Name
Shipment Source name
Document Sequence Style (Shipment NO.)
LCM: How to Associate Receipt Lines with an Invoice if the Invoice Currency is Different from the P

In this Document
Goal
Solution
APPLIES TO:

Oracle Landed Cost Management - Version 12.1.1 and later

Information in this document applies to any platform.
GOAL

Ability to associate Receipt lines with an Invoice if the Invoice Currency is different from the Purchase Order Currency and

This functionality is required when Freight Charges (or other Miscellaneous Charges) are incurred in a Currency that is diffe
SOLUTION

ONLY FOR CUSTOMERS USING : Oracle Landed Cost Management

Customize 'Find Receipts for Matching' Payables form ($AU_TOP/forms/US/ APXRMTCH.fmb) using following steps :

Comment out or remove following code from

OTHR_CHRG_MATCH_EVENT.CONSTRUCT_WHERE_CLAUSE program unit

==
Err:509
app_query.append ('OTHR_CHRG_MATCH',
'CURRENCY_CODE = :INVOICE.INV_CURR_CODE');
==
Replace 'poh.currency_code = :invoice.inv_curr_code' with '((:match_qf.match_type = 'ITEM' AND poh.currency_code = :in
Replace 'RTXN.currency_code = :invoice.inv_curr_code' with '((:match_qf.match_type = 'ITEM' AND RTXN.currency_code =
Save the changes and Compile the form to generate APXRMTCH.fmx.
Go to $AP_TOP/forms/US and take a backup of APXRMTCH.fmx (i.e copy APXRMTCH.fmx to APXRMTCH.fmx.bak)
Copy APXRMTCH.fmx (from step b) to $AP_TOP/forms/US
Test the changes

1. As the case with any other Customization, this Customization also needs to be thoroughly tested for all possible busines

2. As the case with any other Customization, this Customization will also be overridden when a higher version of the form
DO NOT provide this codefix to customers under any circumstance if it has not been previously approved by development

ACCOUNTING ENTRIES
1. Receive the PO with estimated landed cost calculated
        - Receiving Inspection a/c DR @ Estimated Landed Cost
        - AP Accrual a/c CR @ PO Price inclusive of Non-Recoverable tax
        - Landed Cost Absorption a/c CR @ (Estimated Landed cost - PO Price inclusive of Non-Recoverab

These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools >
These entries get created in rcv_receiving_sub_ledger

2. Deliver the PO to Inventory destination

For Standard Costing organization

        - Material Valuation a/c DR @ Std Cost 
        - Receiving Inspection a/c CR @ Estimated Landed Cost 
        - Purchase Price Variance a/c DR @ difference between Std Cost and Estimated Landed Cost

For Average Costing organization 

       - Material Valuation a/c DR @ Estimated Landed Cost  
       - Receiving Inspection a/c CR @ Estimated Landed Cost

These entries can be viewed from Inventory > Material Transactions > Distributions
These entries get created in mtl_transaction_accounts

3. Invoice validated and actual landed cost calculated

Once the Actual Landed Cost is calculated, LCM will populate this information in cst_lc_adj_interface wi

Landed cost Adjustment - Receiving 

       - Receiving Inspection a/c DR @ difference between Actual LC and Estimated LC 
       - Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

Landed cost Adjustment - Delivery (Standard Costing)

       - Receiving Inspection a/c CR @  difference between Actual LC and Estimated LC 
       - Purchase Price Variance a/c DR @ difference between Actual LC and Estimated LC

Landed cost Adjustment - Delivery (Average Costing) 

      - Receiving Inspection a/c CR @ difference between Actual LC and Estimated LC 
      - Landed Cost Absorption a/c DR @ difference between Actual LC and Estimated LC
These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools >
These entries get created in rcv_receiving_sub_ledger

Average Cost Update (Average Costing) 

     - Material Valuation a/c DR @ difference between Actual LC and Estimated LC 
     - Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

LC Variance account is hit ONLY when the available onhand quantity is less that the received (to be adj

If this Average cost update happens for updating the item cost with the difference between Actual and

    - Material Valuation a/c DR @ 0

    - Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC
    - Average Cost Variance a/c DR

These entries can be viewed from Inventory > Material Transactions > Distributions
These entries get created in mtl_transaction_accounts 
The link between the Receiving transaction and Average Cost update is done through txn_source_line_

4. Create accounting for item invoice

     - AP Accrual a/c DR @ PO Price 

     - Tax a/c DR @ tax rate 
     - Liability a/c CR @ Invoice Price including tax 
     - LCM:Invoice Price Variance a/c DR @ difference between PO Price and Invoice Price (This IPV a/c
     - LCM:Exchange Rate Variance a/c DR @ difference between receipt exchange rate and Invoice exc

5. Create accounting for charge invoice

        - Default Charge a/c DR @ invoice price (This charge a/c is defined in Receiving options)
        - Liability a/c CR @ invoice price

6. Perform Return transaction or negative correction after invoice is accounted and actual landed cost is

Return to Vendor /Negative Correction

       - Receiving Inspection a/c CR @ Actual Landed Cost 
       - AP Accrual a/c DR @ PO Price + Non-Recoverable Tax
       - Landed Cost Absorption a/c DR (Actual Landed Cost - {PO Price+Non-Recoverable Tax})

These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools >
These entries get created in rcv_receiving_sub_ledger

Return to Receiving/Negative Correction (Standard Costing)

       - Material Valuation a/c CR @ Std Cost 
       - Receiving Inspection a/c DR @ Actual Landed Cost 
       - Purchase Price Variance a/c CR @ difference between Std cost and Actual Landed Cost

Return to Receiving/Negative Correction (Average Costing) 

      - Material Valuation a/c CR @ Actual Landed Cost 
      - Receiving Inspection a/c DR @ Actual Landed Cost

These entries can be viewed from Inventory > Material Transactions > Distributions
These entries get created in mtl_transaction_accounts

7. Raise a Debit Note

    - AP Accrual a/c CR @ PO Price 

    - Tax CR @ tax rate
    - Liability a/c DR @ Invoice Price including tax 
    - Invoice Price Variance a/c CR @ difference between PO price and Invoice Price

Note:

1. Estimated and Actual Landed Cost are always inclusive of PO price and Non-Recoverable tax.

2. Landed Cost Absorption account need not be having zero balance at the end of this procure to pay c
    Absorption account are the same

3. Accounting entries for Expense POs and Shopfloor destination POs has no impact as Landed Cost Ma

4. Landed Cost Management has no impact on the Encumbrance Accounting as the PO gets reserved a

5. Retroactive Pricing is not supported in LCM enabled organization and hence retroactive price update
s Different from the Purchase Order Currency (Doc ID 1383061.1)

chase Order Currency and when Matching Type is 'Freight' or 'Miscellaneous'or 'Tax'

d in a Currency that is different from the Purchase Order Currency and when the Invoice needs to be settled using a Currency that is differ

ing following steps :

ND poh.currency_code = :invoice.inv_curr_code) OR (:match_qf.match_type <> 'ITEM'))' in PO_NUMBER record group

AND RTXN.currency_code = :invoice.inv_curr_code) OR (:match_qf.match_type <> 'ITEM'))' in RECEIPT_NUMBER record group (at 4 places)

RMTCH.fmx.bak)

ed for all possible business cases before using in Production.

higher version of the form is applied (via a patch). Hence, the Customization needs to be done whenever a patch with higher version of the
approved by development team. This is due to dependencies.

sive of Non-Recoverable tax) (This a/c is defined in Receiving options)

Transactions > Tools > View Accounting 

ated Landed Cost

st_lc_adj_interface with rcv_transaction_id corresponding to the receipt to which the invoice is matched. Then the a
Transactions > Tools > View Accounting

he received (to be adjusted) quantity but NOT zero. When the onhand balance is zero or negative, the average cost

e between Actual and Estimated landed cost for an item which has 0 or negative on-hand quantity, then the account

ough txn_source_line_id. Rcv_transaction_id of deliver transaction is stamped as txn_source_line_id in mtl_material_

ice Price (This IPV a/c is defined in Receiving options)

e rate and Invoice exchange rate (This ERV a/c is defined in Receiving options)

ving options)

nd actual landed cost is calculated 

overable Tax})

Transactions > Tools > View Accounting

Landed Cost

ecoverable tax.

f this procure to pay cycle in LCM enabled organization. It will be zero only if the Actual landed cost has been calcula

act as Landed Cost Management is not applicable for Purchase Orders with Expense and Shopfloor destination.

he PO gets reserved at PO price and it gets reversed at PO price only even though the actual charge account get hit

troactive price update program will not create the retroactive price adjustment entries in Receiving subledger for the
using a Currency that is different from Purchase Order Currency.

BER record group (at 4 places)

atch with higher version of the form (in this case APXRMTCH.fmb ) is applied.
e is matched. Then the adjustment entries would get created as given below on running the Landed Cost Adjustmen
egative, the average cost variance account is hit

quantity, then the accounting entries would be as follows:

e_line_id in mtl_material_transactions for the LCM adjustment transaction which has the transaction type as Average
ded cost has been calculated and the Charge a/c, IPV a/c and Landed Cost   

opfloor destination.

al charge account get hit at landed cost.

ceiving subledger for the receiving transactions created.

e Landed Cost Adjustment Processor
nsaction type as Average Cost Update.
For Landed Cost Management, the accounts should be set up in the following hierarchy:
Define Landed Accounts (can be expense or Accruals based on the business need)
                    Landed Cost Account (parent) 
                    Landed Cost Absorption (Child)
                    Invoice Price Variance a/c (Child)
                    Exchange Rate Variance a/c (Child)
                    Tax Variance a/c (Child)
                    Default Charges a/c (Child)

When the invoices are created in AP for LCM enabled receipts, the AP accrual account is debited.

      AP-PO reconciliation report (in Costing)

      SLA Open Account balances listing for LCM absorption a/c (in SLA) 

Taking an example: 

At PO creation
              Item PO Price: $9 (invoice matching: receipt)
              Tax set up; exclusive tax: 10%; recoverable rate: 50%
              Item cost (estimated): $9, Tax Non Recoverable $ 0.45
              Freight (estimate): $1

Landed Cost calculation

             Item cost: $9/ each
             Tax (non recoverable): $0.45/each
             Freight: $1/each
             Estimated landed cost: $10.45/each
In this case difference of $1 (10.45 -9.45) is credited to the Landed Cost Absorption account.

LCM
-------
For LCM the only the below mentioned changes are proposed in AP:

When the Invoices are matched to LCM receipts, the default account code combinations for certa

For Freight, Miscellaneous and Tax Invoices matched to LCM receipts the account code combinati

AP
----
From AP perspective we do not try to balance the Landed Absorption account. We still debit the a
Please find the example:
This shows how the accounting will happen and how the absorption account will be balanced.

Following is the landed cost example with taxes

Costing Method: average costing

At PO creation
                Item PO Price: $9 (invoice matching: receipt)
                Tax set up; exclusive tax: 10%; recoverable rate: 50%

At receipt: Receipt qty = 10 each

               Item cost (estimated): $9/each
               Freight (estimate): $1/each

Landed Cost calculation

              Item cost: $9/ each
              Tax (non recoverable): $0.45/each
              Freight: $1/each
              Estimated landed cost: $10.45/each

Invoice Side
            Item Invoice comes at $110 (Item $100 + Tax $10, $5 recoverable and $5 non recovera
            Freight Invoice $20

Actual Landed Cost = $125 (Item 105 + Freight $20), Unit LC = 12.5. Calculated by LCM and this
On hand at the time of Cost update is 5 each:

Event
Receipt

Delivery

Item Invoice

Freight/Misc./ Tax Invoice

Landed Cost adjustment transaction: Receipt

Landed Cost adjustment transaction: Delivery

Average Cost adjustment transaction (triggered by LCM

Regarding Actual Freight Invoice:

When LCM is enabled the PPV is with respect to Landed Cost and not PO Price.
So it doesn't matter if the PO price is same as Invoice price or not.
For inventory the incoming cost is Landed Cost and the difference between
landed cost and std inventory cost goes to PPV.

When customer uses LCM they want inventory cost to be equal to Landed Cost in
avg/fifo/lifo costing. When the customer uses the LCM with Std costing they
expect Landed Cost = Inventory + PPV

Now, in the example at the end of the cycle

Landed Cost = 7300

Inventory std = 5000
so the PPV should be 2300 .

When LCM is enabled the PPV is with respect to Landed Cost and not PO Price.
So it doesn't matter if the PO price is same as Invoice price or not.
For inventory the incoming cost is Landed Cost and the difference between
landed cost and std inventory cost goes to PPV.

According to the design currently by default in oracle apps what we have is for the example

Landed COst = 7300

Inventory Std = 5000

Liability Cr (5,500+1800) = Cr 7300

Inventory Dr 5000
PPV Dr (500+300+1500)= Dr 2300
Landed Cost Absorption Cr (1500+1800) = Cr 3300
IPV DR 1500
LCM Default Charge Dr 1800

What normally customers do is have Landed Cost Absorption, IPV and LCM Default Charge accou

If the customer wants to have any change to this default behavior they should
engage their technical contacts to have custom solution.
 hould be set up in the following hierarchy:
Accruals based on the business need)

enabled receipts, the AP accrual account is debited. The Landed cost absorption account is used in Receiving to cred

M absorption a/c (in SLA) 

g: receipt)
overable rate: 50%
Recoverable $ 0.45

credited to the Landed Cost Absorption account.

es are proposed in AP:

pts, the default account code combinations for certain accounts must be changed. These accounts are IPV, ERV and

matched to LCM receipts the account code combination must be defaulted to Charge Account setup in the receiving p

the Landed Absorption account. We still debit the accrual at the PO price and the difference goes to the LCM charge
nd how the absorption account will be balanced.

ng: receipt)
ecoverable rate: 50%

100 + Tax $10, $5 recoverable and $5 non recoverable), and 

ght $20), Unit LC = 12.5. Calculated by LCM and this creates a record in costing interface which is processed by cost

Account Debit Credit

Receiving Inspection $104.50
AP Accrual (at PO price) $94.50
Landed Cost Absorption $10

Organization Inventory Valuation $115

Receiving Inspection $115

AP Accrual (Item Price on PO) $90

AP Accrual (Non recoverable tax) $4.50
Tax Variance (Tax Variance Account Provided by $0.50
Recoverable Tax $5
IPV (Provided by LCM will be defaulted here) $10
AP Liability $110

Charge (Charge Account Provided by LCM will be $20

 AP Liability $20

Receiving Inspection $20.5 = 10 * (12.5  10.45)

Landed Cost Absorption $20.50

Receiving Inspection $20.50

Landed Cost Absorption $20.50

Landed Cost Absorption $20.50

Organization Inventory Valuation $10.25
Landed cost Variance $10.25

1900002182

to Landed Cost and not PO Price.

s Invoice price or not.
st and the difference between

y cost to be equal to Landed Cost in

the LCM with Std costing they

to Landed Cost and not PO Price.

s Invoice price or not.
st and the difference between

n oracle apps what we have is for the example

Cost Absorption, IPV and LCM Default Charge account to point to same parent and do the reconciliation at the paren

this default behavior they should

m solution.

13,132.15
13,132.19

-21,052.79
4,210.56
1900000550
ed in Receiving to credit the difference between the PO price and the estimated landed cost. For reconciliation users n

unts are IPV, ERV and Tax variance accounts. For these Code Combinations, the default accounts must be derived an

etup in the receiving parameters of Inventory organization for LCM. This field must be non editable for invoices matc

oes to the LCM charge accounts for LCM enabled (instead of the normal accounts for IPV, ERV TRV etc.). You may n
h is processed by costing to create adjustments)
nciliation at the parent level so that the Total value at that parent level is 0.
. For reconciliation users need to run following 2 reports:

ounts must be derived and defaulted with the respective LCM specific account code combinations setup in the receiv

editable for invoices matched to LCM enabled shipments.

ERV TRV etc.). You may need to take care as to what accounts they are giving at various level in the LCM screen and
ations setup in the receiving parameters of Inventory Organization.

vel in the LCM screen and accordingly they need to reconcile.