Implementing Project Portfolio Management: From Organization Structure to Recognized Revenue · Module 11 · Burdening and Cross-Charge
Cross-charge: the two models
Lesson 116 of 198 · 2 min
A consultant in the Consulting business unit works on an Engineering business unit project. Whose cost is it? Whose revenue? And does money need to move? Borrowed and lent — the cost is recorded in the receiving unit, and an offsetting entry credits the providing unit. No invoice, no legal transfer. Appropriate within one legal entity, where it is a management accounting matter. Intercompany billing — a genuine internal invoice is raised between entities, with accounts receivable and payable. Required where the units are separate legal entities — because a real transfer of value between legal entities generally has tax and statutory implications. How to choose. Same legal entity → borrowed and lent, almost always. Different legal entities → intercompany, almost always. ASK FINANCE AND TAX. DO NOT DECIDE THIS YOURSELF. The rules tell you what to expect. They do not authorise you to settle it. THE TRANSFER PRICE QUESTION:…
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