What are Allocation Targets?

An allocation target identifies the target account for an allocation. In a standard cost allocation, this is the account to which the charge will be allocated.

The allocation target also identifies a target offset account, where it is required. Each allocation sequence can generate at least two self-balancing ledger transactions. One posts the allocation amount to the target account. The other posts the reverse amount to either:

  • the allocation source account for a split type allocation or
  • the allocation target offset account for a charge type allocation.

See What types of Allocation are Available? for a description of charge and split type allocations.

You can choose to consolidate the target posting transactions according to the analysis codes on some, or all, of the transaction analysis dimensions.

See What Ledger Transactions are Generated by Corporate Allocations? for more information on the ledger transactions produced and the consolidation options available.

The target account for an allocation may be in another ledger, for example one of the ten budget ledgers available.

Allocating Across Business Units

The allocation target may be in a different business unit. This enables you to allocate costs across business units. If you want to allocate across business units, there are two additional important pieces of information you must define:

  • the business unit to be updated
  • the business unit offset accounts required to keep each unit in balance, for example inter-company accounts.

Identifying the Business Unit

If the target account for an allocation is always in the same business unit, regardless of the source transaction, you can identify the target business unit in the allocation target definition.

However, you may want to vary the business unit for the target account according to a business unit identified on the source transaction. In this case, you can use an analysis code on the source transaction to hold the target business unit. You identify the analysis dimension that contains the business unit codes in the allocation target. The allocation target transactions are then posted automatically to the appropriate business unit.

Identifying the Inter-Company Offset Accounts

A split type allocation posts a charge to a target account and posts the balancing, reversal entry to the original source account. If the target account for a split allocation is in a different business unit to the source account, two additional inter-company, or offset, postings must be generated to keep each business unit in balance.

A source offset account is defined in the allocation source. This is the inter-company balancing account for the source business unit. A target offset account is identified in the allocation target and this is the inter-company account in the target business unit. See What Ledger Transactions are Generated by Corporate Allocations?