About intercompany timesheets [AX 2012]

Updated: October 6, 2014

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack

Intercompany timesheets make it possible for workers who are employed by one legal entity to enter timesheet hours for work that they do on projects in other legal entities in the same organization. The legal entity that employs a worker is called the loaning legal entity. The legal entity that manages the project for which the worker contributes hours is called the borrowing legal entity.

The following prices are incorporated into intercompany timesheets:

  • A cost price, which the loaning legal entity incurs by using the worker

  • A sales price, which the customer pays the borrowing legal entity

  • A transfer price, which is the amount that the borrowing legal entity pays to the loaning legal entity for the use of its worker

In Microsoft Dynamics AX 2012 R3 and cumulative update 7 for Microsoft Dynamics AX 2012 R2, intercompany timesheets for a loaning legal entity are posted to an intercompany cost account. These posts are offset by payroll allocation accounts. In earlier versions of Microsoft Dynamics AX 2012, intercompany timesheets were posted as project costs.

Caution noteCaution

If you make an adjustment to an intercompany timesheet, the general ledger accounts of the two legal entities that are involved in the adjusted transaction may become out of balance. In this case, you must manually adjust the account balances.

Before a worker can create and submit timesheets for work performed in a different legal entity, both the loaning and borrowing legal entities must perform certain setup tasks.

The loaning legal entity must perform the following tasks:

Before a borrowing legal entity can add a borrowed worker to one of its projects, a project manager for the borrowing legal entity must perform the following tasks:

When a loaned worker posts timesheet hours for work that was completed for a borrowing legal entity, the profit and loss accounts of both legal entities are affected.

Example

Contoso–USA is an advertising agency that designs brand logos and commercials for a variety of corporate clients. Sanjay, a graphic designer, is a full-time employee in a subsidiary company, Contoso–India. He is currently loaned to Contoso–USA to design billboards for an upcoming convention for one of its clients, Fabrikam USA. This project is owned and executed by Contoso–USA.

The following table shows the rates that have been set up for this arrangement.

NoteNote

In this scenario, the cost price and transfer price are normally set up in the currency of the legal entity that employs the worker, which is Indian Rupees in this example. However, for ease of explanation, all rates are shown in US dollars.

Rate type

Description

Amount in USD

Cost price

The amount per hour that Contoso–India incurs by using Sanjay.

USD 100.00

Transfer price

The hourly price that the loaning legal entity, Contoso–India, charges the borrowing legal entity, Contoso–USA.

USD 150.00

Sales price

The price that the borrowing legal entity, Contoso–USA, charges the customer, Fabrikam USA, for Sanjay’s hourly work

USD 200.00

Sanjay creates a new timesheet, specifies Contoso–USA as the legal entity for a line, and submits 40 hours for the Fabrikam project.

David, the project manager in Contoso–USA, reviews the timesheet line for Sanjay’s work on the Fabrikam project and approves it. The timesheet line is posted and the hours are billed. This affects the P&L of Contoso–USA and Contoso–India in the following ways:

  • Contoso–USA records a gross profit of USD 2,000.00 from the USD 8,000.00 in revenue that it receives from Fabrikam, minus the USD 6,000.00 that it pays to Contoso–India.

  • Contoso–India records a gross profit of USD 2,000.00 from the USD 6,000.00 in revenue that it receives from Contoso–USA, minus USD 4,000.00 as the cost of services for Sanjay’s work.

    In Microsoft Dynamics AX 2012 R3 or cumulative update 7 or later for AX 2012 R2, the ledger entry for Contoso–India for the cost of Sanjay’s hours is posted to an intercompany cost account that is offset by a payroll allocation account. By default, the financial dimension from Sanjay’s worker profile is copied to the ledger entries.


Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).

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