transfer pricing in sap

SAP AG

Course Overview Diagram I

1.1. Introduction and Definition of Terms

2.2. Fundamentals of the Transfer Pricing Solution

4.4.

5.5.

Transfer Prices in the Various Applications

Posting Examples

3.3. Transfer Prices from the Viewpoint of PCA

6.6.

New Functions in PCA

SAP AG

Strategic Enterprise Control

Corporate Executive Board

?

BRA

Division A

Division B

J

America Europe/Africa Asia

MEX

D

USAF

E

z Legal view - that of the independent legal companiesz Group view - that of the organization as a wholez Profit center view - that of the decentralized responsibility areas

SAP AG

Parallel Valuation Approaches

Group view Legal view Profit center view

Profit center 1CoCd 1 CoCd 2 CoCd 3 CoCd 4

Group

Profit center 2

SAP AG

Definition of a Transfer Price

A transfer price is a price used to valuate the transfer

of goods and services between independent

organizational units.

SAP AG

Transfer Prices in the R/3 System

Controlling area

PCAPCA

FIFI

COCO

Company code

Profit center

Transfer price from the group viewpoint = group production costsTransfer price from the profit center viewpoint = management priceTransfer price from the legal viewpoint = sales and purchase price

SAP AG


Semifin.material

Distributioncenter Sales

order

Finishedproduct

Rawmaterial

Productionorder

Cost center

Productionorder

SAP AG


Productionorder

Salesorder

Cost center

Productionorder

Semifin.material

Rawmaterial

Distributioncenter

Finishedproduct

Company code 1PrCtr1 PrCtr2 PrCtr3 PrCtr4

75100

120

CCtr 20

Assumed Plan = Actual => No Variances

220

240

Company code 2 Company code 3

L 120G 90P 140

L 120G 90P 140

L 70G 70P 75

L 70G 70P 75

G 70L 70

P 70 P 240G 90L 220

SAP AG

Course Overview Diagram II



4.4.

5.5.


Posting Examples


6.6.


SAP AG

Quantity and Value Flow

PCAPCA

Profit center 1 Profit center 2

FIFICOCO--OMOM COCO--

PAPAD

i

r

e

c

t

c

o

s

t

s COCO--PCPC

O

v

e

r

h

e

a

d

c

o

s

t

s

Purchase Production Transfer SaleProcess

anddata

VALUE

FLOW

SAP AG

The Concept of Parallel Value Flows

PCAPCA


FIFICOCO--OMOM

COCO--PAPA

D

i

r

e

c

t

c

o

s

t

s

O

v

e

r

h

e

a

d

c

o

s

t

s

Material Ledger

COCO--PCPC

or or

LGP

Process anddata

VALUE

FLOW LG

P

StockLGP

SAP AG

Currency and Valuation Profile

Currency type

Valuation

0

1

2

Company code currency

Group currency

10 30

10Leg.

30PrCtr.

30Grp

Legal

Group

PrCtr

SAP AG

Activating the C & V Profile

.COCO--OMOM

Controlling

COCO--PCPC

C & VProfileCur.

Leg. Activate

Cur.Grp Cur.

Leg.Cur.

PrCtr Cur.Grp

Cur.PrCtrMaterial

LedgerCur.

PrCtrCur.

GrpLeg.Cur.

SAP AG

Scenarios

or orPCAPCAProfit Center Accounting

FIFI

Financial Accounting

mand.

opt.

opt.

COCO--OMOM

Controlling

COCO--PCPC

COCO--PAPA

mand.Material Ledger

FIFI--AAAA

MLML Cur.Leg.

Cur.Leg.

Cur.Leg.

Cur.Leg.

Cur.Leg.

Cur.Grp

Cur.Grp

Cur.Grp

Cur.Grp

Cur.Grp

Cur.PrCtr

Cur.PrCtr

Cur.PrCtr

Cur.PrCtr

Cur.PrCtr

mand. opt.

opt.

opt.

SAP AG

Example I - Group Valuation

PCAPCA

Profit Center AccountingCur.

Grp

FIFI


COCO--OMOM

Controlling

COCO--PCPC

COCO--PAPA

Material Ledger

operational

Cur.Grp

Cur.Leg.

Cur.Leg.

Cur.Grp

Cur.Leg.

Cur.GrpFIFI--AAAA

Cur.Leg.

Cur.Grp

SAP AG

Example II - PCA Valuation

Profit Center AccountingPCAPCA

Cur.PrCtr

FIFI


COCO--OMOM

Controlling

COCO--PCPC

COCO--PAPA

Material Ledger

operational Cur.PrCtr

Cur.PrCtr

Cur.PrCtr

Cur.Leg.

Cur.Leg.

Cur.Leg.

FIFI--AAAA

Cur.Leg.

Cur.PrCtr

SAP AG

Summary I

z Parallel value flows throughout all of Financials

z The valuation approaches stored in the system are defined in the currency and valuation profile.

z You can store up to- 3 valuations in- 2 currencies

throughout your system.

SAP AG

Summary II

z Inventory is valuated using all active valuation approaches in parallel.

z The material ledger is a subsidiary ledgerin inventory accounting.

z Inventories are valuated by plant or company code in the R/3 System.

z Inventories of one material in one plantalways belong to the same profit center.

SAP AG

Summary III

z No influence on posting logic.z Parallel values posted to the same

accounts.

z Parallel valuation approaches are currently only supported for goods movements.

SAP AG

Course Overview Diagram III



4.4.

5.5.


Posting Examples


6.6.


SAP AG

Transfer Prices Between Profit Centers

TPTP

TP

TPTP

SAP AG

Valuation Approaches in PCA

Goods movements valuated with sale orpurchase price

Goods movements valuated with group cost of goods manufactured

Goods movements valuated with internally agreed prices

Legal

Group

Profit center

SAP AG

Transfer Prices in PCA


Transferpreis150Transfer price150

PCA

MaterialProductionorder

Parallel value flows

120

FI/CO

Logistics Quantity flow

SAP AG

Transfer Prices in PCA

Profit center 1 Profit center 2Materialconsumption 150

Internal revenue: - 150

Cost of sales + 120Stock - 120

PCA

Quantity flow

Parallel value flows

120Material

Productionorder

Logistics

FI/CO

SAP AG

Flexible Transfer Pricing

0001 C- - -

0001 A X100 X2000002 B X100 X300- - -

0001 PROD1 X2000001 PROD2 X300- - -

5.5%

5%6.25%

Transfer price

Plant Product group

Plant Prod.grp PrCtr Rec.PrCtr

Plant Material PrCtr

TP markup

TP markup

1200 DEM1500 DEM

SAP AG

Customizing for Transfer Pricing

Pricing procedure Condition types

Access seq.

Transfer priceCondition tables

SAP AG

Customizing for Transfer Pricing

Variant for transfer pricing: 0

Pricing procedureStep Condition type From To Cond.formula 10 TP0120 TPB1 10030 TP02 20 20

TP02Calc. rule ACond.class A

TPB1Calc. rule CCond.class B

TP01Calc. rule CCond.class B

Fixed price150

Calc. price95

Markup 10%

SAP AG

Planning - Valuation with PCA Cost Est.

HALB1

FERT- REP

HALB2

MGK 500,-

HALB3

MEK 1800, - MGK 500,

PrCtr 1 PrCtr 2

TP 3000,-

MEK 1400,-MEK 1000

HALB1 1ST 400000 1000,-HALB2 2St 412000 1400,-HALB3 1ST Lief.v.anderen 3000,-.

PrCtr: X100 Material FERT-REPPlanversion: 001Jahr: 1999

MGK 800,-

SEMI1

PROD- REP

SEMI2

MOH 500

SEMI3

MDC 1800 MOH 500

PrCtr 1 PrCtr 2

TP 3000

MDC 1400MDC 1000

SEMI1 1unit 400000 1000SEMI2 2units 412000 1400SEMI3 1unit "Goods from other PrCtrs" 3000

PrCtr: X100 Material PROD-REPPlan version: 001Year: 1999

MOH 800

SAP AG

Planning - Valuation with Transfer Prices

PrCtr Receiver PrCtr Material Plant Transfer price

X100 X200 REP-1 0001 1200 USD

X100 X300 REP-2 0001 1000 USD

PrCtr PPrCtr Acct Material Plant Qty

X100 X200 800000 REP-1 0001 10 un. X100 X300 800000 REP-2 0001 5 un.

Revenue

12,000 5,000

PrCtr: X100Plan version: 001Year: 1999

SAP AG

Analysis of Profit Centers in CO-PA

Val. CoCd PrCtr Mat. Rev. Costs CCtr/Group

PCA 0001 X100 SEMI 75 70

Legal 0001 X200 PROD 100 80 70PCA 0001 X200 PROD 120 85

PrCtr X100 PrCtr X200

L 70G 60

P 70

PrCtr X300

Company code 0001

SEMI PROD

10

P 85

L 80

L 100G 70

P 120

Company code 0002

G 70

PCA 75 PCA 120CCtr

L 80G 70P 85

SAP AG

Summary I

z Profit centers earn profit just like independent companies.

z Goods movements can be valuated using transfer prices.

z Goods movements between profit centers can be analyzed in CO-PA.

z No internal payables/receivables are posted.

SAP AG

Summary II

z Transfer prices are calculated using conditions.

z Plan costs are taken from the profit center cost estimate.

z Plan revenues are found using transfer pricing.

SAP AG

Course Overview Diagram IV



4.4.

5.5.


Posting Examples


6.6.


SAP AG

Parallel Valuation Approaches in FI

FIFI General LedgerCurrency and

Valuation ProfileValuation Currency type

Legal Company code currencyGroup Group currencyPCA Group currency

Legal

Group

PCA

Document

SAP AG

Parallel Valuation Approaches in FI-AA

AAAAIMIM

Cap. investm. order

L 50G 40P 60

Depreciation areaArea Cur.type

50 01 1040 11 3160 21 32

Settleto asset

SAP AG

Parallel Valuation Approaches in CO

Actual version 002

Actual version 001

Actual version 000

CO area currencyObject currency

CO data

Transaction currency

COCO

Currency and valuation profile

Legal Company code currencyGroup Group currencyPCA Group currency

Valuation Currency type

SAP AG

Additional Actual Versions in CO

TP 700 USD

Legal 500

PrCtr 600

Group 400-300 DEM

Material Overhead

700 70 DEM

400500

70

70

PrCtr 1

operational70

PrCtr 2

SAP AG

Internal revenues- Variable COS_____________________

Contribution margin I- Fixed COS_____________________

Contribution margin II- Overhead

. . .

_____________________

Operating result

Transfer Prices in CO-PA

Profitability report:PrCtr1

Company code 1PrCtr1 PrCtr2 PrCtr3

75100

120- +

Company code 2

L 100G 70P 120

L 70G 70

P 75

G 70L 70

P 70

P

r

o

f

i

t

c

e

n

t

e

r

Company code

Prod

uct

L 70G 70P 75

SAP AG

Material Inventories

Legal

PrCtrGroup

Material Costing

Inventory Management

Invoice Verification

Production Order Delivery

Production Order Settlement

SAP AG

Product Cost Planning

Legal 1200

PrCtr $500

Group $270

Material Activity Overhead Profit St.price

DEM 1000.00 100.00 100.00 1200.00

USD 170.00 50.00 50.00

$330$230 $270.00

USD 400.00 50.00 50.00 $500.00

Controlling areaCOCO--PCPC

Legal mat. cost estimate

Group cost estimate

Profit center cost estimate

SAP AG

Reporting - Group Costing

+

-+

+

-+

0812347-1235485855967-0956/434

Company code 0001 Company code 0002 Company code 0003

Profit center PC - 1Profit center PC - 3Profit center PC - 5Profit center PC - 9

30,000 34,400 4,40045,000 47,000 2,00054,000 63,900 9,90012,500 13,500 1,00020,000 22,500 2,50021,500 27,900 6,40010,000 11,000 1,0009,000 15,000 3,000

500 900 4002,000 1,000 2,000

Material number Material Production Profit

. . .

SAP AG

Group Costing

Company A Company B Company C Group

DC = Direct CostsPOH = Proportional OverheadFOH = Fixed OverheadP = Profit (Revenue ./. Full Costs)Index A, B, C = Company A, B, C

Group CE Standard CE Group CE Standard CE

DCA

POHA FOHA

PA

DCA

POHA FOHA

DCB

POHB FOHB

DCB

POHB FOHB

DCA

POHA FOHA

DCB

POHB FOHB

PB

Broken down Total

POHC FOHC POHC FOHC

PC

POHA FOHA

POHB FOHB

POHC FOHC

PB

PC

DCC

DCC

DCA

DCB

DCC

DC

P

POH FOH

Group = Standard CE

PA

PA

PB PB

PC

PA

SAP AG

Example: Value-Added Chain I

CoCdCoCd BX03, Plant WX09BX03, Plant WX09PrCtr X400

CoCdCoCd BX02, Plant WX03BX02, Plant WX03

PrCtr X300

PrCtr X100

StockStock transfer transfer SaleSale: 300DM: 300DM

PrCtr transferPrCtr transfer: 240 DM: 240 DM

ProductionProduction inin anotheranother plantplant

SaleSale = = PrCtr transferPrCtr transfer: 800 DM: 800 DM

PrCtr transferPrCtr transfer: 200 DM: 200 DM

GROUP

FINISH

SEMI

RAW 1 RAW 1

RAW 2

SEMI

Legal sale price

Profit center transfer priceMarkup: 20% on material

SAP AG

Example: Value-Added Chain II

PrCtr X400

RAW 1 Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) US$ 100,00 100,00(G) DEM 200,00 200,00(P) DEM 200,00 200,00

PrCtr X300

RAW 1 Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) DEM 300,00 300,00(G) DEM 200,00 40,00 100,00 200,00(P) DEM 240,00 240,00

PrCtr X100

RAW 2 Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) DEM 150,00 150,00(G) DEM 150,00 150,00(P) DEM 150,00 150,00

SEMI Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) DEM 450,00 200,00 44,00 694,00(G) DEM 350,00 200,00 44,00 90,00 100,00 594,00(P) DEM 440,00 200,00 44,00 684,00

SEMI Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) US$ 400,00 400,00(G) DEM 350,00 200,00 44,00 206,00 206,00 594,00(P) DEM 800,00 800,00

FINISH Material Activity Overhead Profit PrCtr Profit CoCd Price M L(L) US$ 400,00 50,00 40,00 490,00(G) DEM 350,00 300,00 124,00 206,00 206,00 774,00(P) DEM 800,00 100,00 80,00 980,00

300 DM300 DM

800 DM800 DM

200 DM200 DM

CoCdCoCd BX03, Plant WX09BX03, Plant WX09 CoCdCoCd BX02, Plant WX03BX02, Plant WX03GROUP

240 DM240 DM

800 DM800 DM

Legal sale price

Profit center transfer price

S56_100-400

S56_100-431

S56_100-120

S56_100-431

S56_100-400

S56_P-100

Markup: 20% on material

SAP AG

Purchasing and Sales

PrCtr1 PrCtr 2

L 70G 70P 75

L 100G 70P 120

100

Company A Company B

IDOC

Goods issue

Goods receipt

Stock transferorder

Invoice receipt

Invoice issue

120

SAP AG

Pricing in SD

z Which conditions are required? Revenue conditions for all valuation approaches in the system Cost conditions for the valuation approaches used in CO-PA

z The following conditions are delivered with the standard SAP system:

KW00 Revenues/Costs in the Group Valuation Approach PC00 Revenues in the Profit Center Valuation Approach PCVP Costs in the Profit Center Valuation Approach

SAP AG

Pricing in SD

z Group Valuation KW00 Revenues/Costs

Type b, statistical

z PCA Valuation PC00 Revenues

Type c, statistical

PCVP CostsType h, statistical

n the profit center valuation

n the group valuation

ions of type b were transferred to are transferred to CO-PA from

exit

z Type h reads the material ledger price iz Type c performs pricing for the profit center valuationz Type b reads the material ledger price iz Up to and including Release 4.5, no condit

CO-PA. Group costs of goods manufacturedthe corresponding costing or from a user

SAP AG

Posting Example

Sale between companies within the group

FIFI

L - LegalG - Group

Goods usageL 50G 40

ReceivablesL 150G 150

RevenuesL 130G 40

Sales taxL 20G 20

StockL 50G 40

StockL 80 G 40

GR/IRL 80 G 40

IC profit acctL G 90

Price diff.L 50G

Input taxL 20 G 20

VendorL 150G 150

GR/IRL 80 G 40

Goods receipt

Invoice receipt

Goods issue

Billing document

IC profit acctL G 90

SAP AG

Account Categories

FIFIAccounts with parallel valuation

Accounts without parallel valuation

Clearing accounts

L 150G 150

VAC

L 130G 130

ReceivablesL 20G 20

Input taxL 20G 20

Sales taxL 150G 150

Vendor

L 130G 40

RevenuesL 50G 40

Stock

L 80 130G 75 40

GR/IR

L 50G 40

Usage

L 50G 40

Change in stk

L 50G

Price diff.

L 50G 40

Expense

SAP AG

Summary I

z Parallel valuations in FI follow the same logic as the parallel currencies.

z No influence on posting logic.z Parallel values posted to the same accounts.z Additional accounts only required for:

- Clearing of payables and receivables- Internal revenues and costs

SAP AG

Summary II

z In FI-AA the parallel valuations are stored in different depreciation areas.

z In CO the parallel valuation approaches are stored in separate actual versions.

z The additional actual versions are stored in the system as delta versions.

z In CO-PA legal and profit-center valuation are stored in separate ledgers.

z In CO-PA group valuation is stored in the legal ledger in separate value fields.

SAP AG

Restrictions I

z Transfer prices currently can only be used for goods movements.

z FI-AA can only store those valuation approaches that are active in FI as well.

z Group costing is only possible within one controlling area.

z Parallel valuation approaches are only possible within one controlling area.

z No parallel valuation approaches for unvaluated sales order stock.

SAP AG

Restrictions II

z WIP at targets does require the legal valuation as the operational one.

z WIP at targets will only be calculated in the operational valuation.

z Parallel valuation approaches are only possible with invoice verification in Logistics.

z Automatic invoice receipt for cross-company processing uses EDI, even within the same system.

SAP AG

Course Overview Diagram VI



4.4.

5.5.


Posting Examples


6.6.


SAP AG

Scenarios

PCAPCAProfit Center AccountingCur.

PrCtr

FIFI


COCO--OMOM

Controlling

COCO--PCPC

COCO--PAPA

Material Ledger

FIFI--AAAA

MLML

Operational

Cur.Leg.

Cur.PrCtr

Cur.Grp

Cur.Leg.

Cur.PrCtr

Cur.Grp

Cur.Leg.

Cur.PrCtr

Cur.Grp

Cur.Leg.

Cur.Grp

Cur.PrCtr

SAP AG

Conventions for Representing Postings

PCAPCA

Int. change in stockVALUE

FLOW

FIFI

COCO--PCPC

COCO--OMOM

COCO--PAPA

Updatein

CO

Additional posting lines in

Profit CenterAccounting

Account

Postings in FIL = LegalG = GroupP = PrCtr

Process anddata

Process

SAP AG

Example of a Posting in Release 3.0

Consumption forproduction order

FIFI

COCO--PCPC

COCO--OMOM

COCO--PAPA

Process anddata

L 60

Consumption

Stock

L 60

Consumption

L 60

Consumption

L 60

VALUE

FLOW

PCAPCA

SAP AG

Material Withdrawal for a Production Order

PCAPCAPrCtr 1

FIFI

COCO--PCPC

COCO--OMOM

COCO--PAPA

PrCtr 2Transfer price = 150

ConsumptionL 100G 80P 150

ConsumptionL 100G 80P 150StockLGP

10080

120

Int. change in stockP 120V

ALUE

FLOW

Internal revenuesP 150

Consumption 150

Consumption forproduction orderPrCtr 1

PrCtr 2Process anddata

SAP AG

Activity Allocation for a Production Order

PrCtr 1 PrCtr 2

Int. activity alloc.P 600

Int. activity alloc.

P 600

PCAPCA

VALUE

FLOW

COCO--PCPC

COCO--OMOM

COCO--PAPA

FIFI

Int. activity alloc.L 600G 600P 600

Int. activity alloc.LGP

600600600

Process anddata

Activityallocation

PrCtr 1 PrCtr 2

SAP AG

Results Analysis and Settlement of WIP

PCAPCA

FIFI COCO--PCPC

COCO--OMOM

COCO--PAPA

VALUE

FLOW

Production costsL 700G 680P 750

Change WIPP 750

Balance WIPL 700G 680P 750

Change WIPL G P

700680750

Results analysis,WIP settlement

Process anddata

FI document

SAP AG

Delivery to Stock Within the Same Plant

PCAPCA

VALUE

FLOW

Factory outputP 600,-

CostsP 750

FIFI COCO--OMOM

COCO--PAPAStock

L 500G 400P 600

Factory outputL GP

500400600

Factory outputLGP

500400600

CostsL 700G 680P 750

COCO--PCPC

Deliveryto stock

Processanddata

SAP AG

Stock Transfer Between Profit Centers

PrCtr 1

VALUE

FLOW

FIFI

COCO--PCPC

COCO--OMOM

COCO--PAPA

PrCtr 2Transfer price = 100

Int. change in stkP 60Internal revenuesP 100

Int.change in stkP 100

Goods from PrCtrP 100

StockL 80G 40P 90

StockLGP

504060

30

PCAPCA

Price diff.L 30GP 10

Plant1PrCtr 1 Plant2PrCtr 2

Stock transferProcess

anddata

SAP AG

Primary Posting to a Cost Center

PCAPCA

VALUE

FLOW

ExpenseP 200

FIFI

COCO--PCPC

COCO--OMOM

COCO--PAPAExpense

L 200G 200P 200

ExpenseL 200G 200P 200

200200200

VendorLGP

200200200

Process anddata

Primary postingto cost center

SAP AG


1.1. Introduction and Definition of TermsTime: 30min.

Strategic Enterprise Control Paralle Valuation Approaches Definition of TP Transfer Price in R/3 Example 1 without values Example 2 with values

SAP AG


2.2. Fundamentals of the Transfer Pricing SolutionTime: 1 hour/ Exercise 30min

Quantity and Value Flow Concept of Parallel Valuation Currency & Valuation ProfileDemo1: All settings IMG Activating C&VDemo2: Activation Explain the check Scenarios Example 1 Group Example 2 PCA?Demo3: Overview of the settings in various

applicsations SummaryExercise 1 Time 30minCheck the TP Settings in IMG

SAP AG

Course Overview Diagram I3.3. Transfer Prices from the Viewpoint of PCA

Time: 1 hour / Exercise 30 min. TP between PrCtr Valuation approaches in PCAtion TP in PCA Example TP in PCA ( with accounts) Flex. TP-Def.Demo1: Define Price Dependendies(Condtion Tables) Customizing TP (Buttom up)Demo2: Show all parts(Access seq.,...) Customizing TP (Top down)Demo3: S56_100-120 WX03 --> WX04 Planning using Cost estimate Planning with TPDemo4: IMG PCA-->Planning-->Goods move. Analysis of PrCtr in CO-PA SummaryExercise Stock transfer within one company

SAP AG

Course Overview Diagram I4.4. Transfer Prices in the Various Applications

4.1 Finacial Accounting

Asset Accounting

Controlling

Product Costing

Cost object Controlling

Profitability Analysis

4.2

4.34.3

4.44.4

4.54.5

4.64.6

4.74.7 Procurement and Sale

SAP AG


4.1 Finacial AccountingTime 20 min

Parallel Valuation Approaches in FI

Demo1: IMG Additional local currencies

Demo2: Goods receipt501; S56_100-431; WX03; 10pc

SAP AG


4.2 Asset AccountingTime 30 min

Parallel Valuation Approaches in AA

SAP AG


4.3 ControllingTime

SAP AG


4.4 Product CostingTime

SAP AG


4.5 Cost Object ControllingTime

SAP AG


4.6 Profitability AnalysisTime

SAP AG


4.7 Procurement and SaleTime

transfer pricing in sap

Documents

sap agdefinition

profit center viewpoint

sap agtransfer prices

prctr cur

groupprofit center

aaaamlml cur

grp cur

pca sap agquantity