Professional Documents
Culture Documents
VIM
1 | R2R GL
GR / IR
IPGM
Cost Allocation
Forex
Obsolescence
Bad Debts
Warranty
Agenda
Loknath P.
Walkthrough
GL Process Understanding
Agenda
Process Walkthrough
Warranty Provision
Obsolescence
FA - MDM
Bad Debts
Obsolescence Provision
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
a
Foreign Exchange Revaluation
2 | R2R GL
Warranty Provision
Purpose:
Warranty Provision, are the provisions covering free repairs or replacements in
the Warranty period.
Obsolescence
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
3 | R2R GL
Bad Debts Provision
Purpose:
Bad Debts Provision is calculated for the Invoices overdue for more than 60 Days, Credit
amount are by default always considered as overdue.
Obsolescence
FA - MDM
Bad Debts
Warranty
• Provision for invoices more than 2 months overdue
GR / IR
Agenda
IPGM
Forex
VIM
Insurance coverage
a oraother
a similar security measures.
Refundable VAT refunded which is included in the debt.
Note: Provisions for bad debts not applicable for Danfoss companies, joint ventures or
associated companies.
4 | R2R GL
Obsolescence Provision
Purpose:
Obsolescence is the term used to describe that stocks are either difficult or
impossible to consume or sell.
• The provision for obsolete inventory is based on the book value and age of the unsold
inventory.
• The obsolescence provision is calculated on the following inventory:
Cost Allocation
Obsolescence
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
a a a a
5 | R2R GL
Obsolescence Provision
• Special Treatment for Obsolescence provision
For Entities moved into One ERP between 0 to 24 Months
Cost Allocation
Obsolescence
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
a a a a
6 | R2R GL
Forex Revaluation
Purpose:
Foreign exchange (FX) revaluation is a process that is performed to account for
the impact of changes in exchange rates on financial transactions denominated in foreign
currencies.
Cost Allocation
• This process helps companies accurately reflect the current value of their foreign currency-
Obsolescence
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
a aFXarevaluation
• The key reasons for performing a a
1.Accuracy: Reflects accurate values of foreign currency transactions in financial
statements.
2.Risk Management: Helps manage currency risk by assessing the
impact of exchange rate fluctuations.
3.Decision Making: Provides reliable financial data for informed
business decisions.
4.Consolidation: Ensures accurate consolidation of financial data
from different locations.
7 | R2R GL
Run Cost Allocation
Purpose:
Cost center allocation, allocates the costs posted on common cost centers to
appropriate product lines according to pre-defined allocation key.
• Allocation of cost is used within a company code, during month closing activity, to move costs
Cost Allocation
from one cost center (sender cost center) to one or more cost centers (receiving cost centers).
Obsolescence
FA - MDM
Bad Debts
• Allocation cycles are used to allocate costs between cost centers based on various sender and
Warranty
GR / IR
Agenda
IPGM
Forex
receiver.
VIM
a a a a a a
Allocation Cycles
1.GS Rent
2.GS Facility/Utility
3.GS Logistics
8 | R2R GL
Inventory Purchased From Group Members
Purpose:
IPGM is for HFM upload files for Internal Profit Elimination regarding Inventory
Purchased from Group Members (IPGM).
• IPGM is for entities having more than 150 000 EUR in internal
Cost Allocation
Obsolescence
sales.
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
Forex
• The Internal Gross Profit Margin report is calculated based on a
VIM
a a a a a a a
weighted average of the last 3 months sales
Calculation:
9 | R2R GL
Goods Receipt / Invoice Receipt
Purpose:
A GR/IR clearing account is a bookkeeping device that can be used when goods
arrive before the invoice is Delivered, or when an invoice arrives before the goods are
delivered.
Cost Allocation
Obsolescence
FA - MDM
Bad Debts
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
The GR/IR clearing account thereby serves as a “Intermediate GL Code" between the inventory
a a a a a a a a
account and the vendor account, minimizing confusion and reducing the risk of accounting
errors.
10 | R2R GL
Goods Receipt / Invoice Receipt
GR/IR Reclassification
Cost Allocation
Goods Delivered but Invoice received but no
Obsolescence
Scenario
FA - MDM
no Invoice Receipt
Bad Debts
Goods Delivered
Warranty
GR / IR
Agenda
IPGM
Forex
VIM
a a a a a a a a
GR Done it will Impact IR Done it will Impact
Impact Vendor A/C
Inventory A/C
11 | R2R GL
Vendor Invoice Management- Accrual
Purpose:
made, for the invoices and credit notes received in VIM which is not posted.
Cost Allocation
Obsolescence
FA - MDM
Bad Debts
Warranty
The accrual process involves creating accrual provision for capital expenditures
GR / IR
Agenda
IPGM
Forex
VIM
a a a (Opex).
(Capex) and operational expenditures a a a a a a
12 | R2R GL
13 | R2R GL
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FA - MDM
VIM
GR / IR
IPGM
Cost Allocation
Forex
Obsolescence
Bad Debts
Warranty
Agenda
14 | R2R GL