What Ledger Transactions are Produced by Each Allocation Type?
Four chart of account codes can be referenced in an allocation: source account, source offset account, target account and target offset account. Corporate allocations generates ledger transactions to post to at least two of these accounts in an allocation run, and posts to all four accounts if the allocation crosses business unit boundaries.
It is, therefore, important to understand when each account is used.
Two different types of allocation can be performed: charge and split and they post to different accounts. In addition, if the allocation target account is in a different business unit to the source account, additional accounts are used to keep the business units in balance.
For an allocation within a single business unit:
- a charge allocation posts the allocation transaction to the target account and posts the balancing reversal to the target offset account.
- a split allocation posts the allocation transaction to the target account and posts the balancing reversal to the source account.
For an allocation to a different business unit, a split allocation also posts to the source offset account to keep the source business unit in balance.
There are, therefore, four different variations of allocation journal produced, depending on the type of allocation being performed. These are summarized below using examples.
Allocations Within the Same Business Unit
The following examples are all allocating from a source account in business unit 1 with a source amount of GBP 1000D.
Example 1: Charge Allocation - to target account in the same business unit
Resulting Journal
| Business Unit | Account | Amount |
| 1 | Allocation Target | GBP 1000D |
| 1 | Target Offset | GBP 1000C |
The original source amount is not adjusted, instead a target offset account is updated.
Example 2: Split Allocation - to target account in the same business unit
Resulting Journal
| Business Unit | Account | Amount |
| 1 | Allocation Target | GBP 1000D |
| 1 | Allocation Source | GBP 1000C |
The original source amount is adjusted, rather than a target offset account.
Allocations Across Business Units
The following examples are all allocating from a source account in business unit 1 with a source amount of GBP 1000D.
Example 3: Charge Allocation - to a target account in a different business unit
Resulting Journal
| Business Unit | Account | Amount |
| 2 | Allocation Target | GBP 1000D |
| 2 | Target Offset | GBP 1000C |
No posting is made to the source business unit so a source offset account is not required.
Example 4: Split Allocation - to a target account in a different business unit
Resulting Journal
| Business Unit | Account | Amount | Comment |
| 1 | Allocation Source | GBP 1000C | The source reversal transaction, adjusting the original source account |
| 1 | Source Offset (I/C) | GBP 1000D | The source reversal balancing transaction required to keep the source business unit in balance |
| 2 | Allocation Target | GBP 1000D | The allocation target posting |
| 2 | Target Offset (I/C) | GBP 1000C | The target balancing transaction required to keep the target business unit in balance |