Ledger Allocation Rules

For use with Microsoft Dynamics 365 Finance. 

Ledger allocation rules are used to automatically calculate and generate allocation journals and account entries for the allocation of ledger balances or fixed amounts. Allocation methods can be variable or fixed. The following allocation methods can be used for ledger allocation rules:

• Basis – This variable method is used when the allocation depends on the actual ledger balance, based on filter criteria. For example, advertising expenses can be allocated based on each department's sales in proportion to the total departmental sales.
• Fixed percentage and Fixed weight – For these methods, the allocation percentage or weight is defined directly for the rule. For example, advertising expenses can be allocated so that Department A receives 70 percent of the advertising expense and Department B receives 30 percent.
• Equally – This method distributes the amount equally to each defined destination. For example, if destinations are defined for Department A and Department B, advertising expenses can be allocated so that both Department A and Department B receive 50 percent of the advertising expense.

If Basis is used as the allocation method for an allocation rule, you must also define separate ledger allocation basis rules. The "Process allocation request" process lets users process the ledger allocation rule and preview the resulting allocation journal entries before they either post or delete the calculated allocations.

Each allocation rule has four components: general, source, destination, and offset. An additional component, ledger allocation bases rules, is required if Basis is used as the allocation method. Each component provides a critical piece of the information that is required in order to process allocations.

• General – This component is where the user specifies options such as the allocation method, intercompany rule settings, and whether the rule is active.
• Source – This component is where the user specifies the source data for the allocation. Allocation can be based on ledger balances (Data source = Ledger) or fixed amounts (Data source = Fixed value). When Data source is set to Ledger, source filter criteria must be defined for the ledger allocation rule (for example, for the advertising expenses).
• Destination – This component defines how the result of the allocation calculation should be distributed and accounted for. For example, there can be one destination line for each department.
• Offset – This component defines how main accounts and dimensions should be determined for the offset entries that balance the destination entries. User-defined options are typically used instead of accounts and dimensions that are based on the source. When Data source is set to Fixed value, Source can't be used as an option.
• Ledger allocation basis rules – These rules use their own source filter criteria to determine which ledger balances should be used for allocation (for example, the revenue per department). Each allocation basis rule can be used with multiple allocation rules.

Use the Process allocation request page to create an allocation journal that can be reviewed and approved before posting to General ledger, or posted directly to General ledger. Before you can create an allocations journal, there must be least one active Ledger allocation rule. This task uses the USMF demo company.

1. In the navigation pane, go to General ledger > Allocations > Process allocation request.
   
   

2. In the Rule field, select the desired record in the drop-down menu.
   
   

3. In the As of date field, enter a date.

   • The As of Date is very important when the Ledger is the Data source for the rule. This date controls which ledger balances to include for allocation.
   • In the Zero source field select Stop. This will stop the allocation process and display a message that states that a zero source amount is selected.
     
     

4. In the Proposal options field, select Proposal only. Select Proposal only to review and optionally approve the result in Allocation journals prior to posting the allocation to General ledger.
   
   

5. In the GL posting date field, enter a date.
   
   

6. Select OK.
   
   

7. In the navigation pane, go to Modules > General ledger > Allocations > Allocation journals.
   
   

8. Select Lines.
   
   

9. Select Post.
   
   

10. Select Post.

A simple summary video for Ledger Allocations is located at: https://www.youtube.com/watch?v=AtZ9uwKbVSU.

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