Account allocations example—maintain source account balances

This example walks you through creating an account allocation definition that maintains the original balance in the accounts that make up the source pool. Use this type of allocation definition when you want to leave your account balances unchanged while redistributing portions of the balance to different dimensions.

If you're goal is to allocate source account balances to a different account, see Account allocation example - allocate source account balances to a different account.

This is only an example. Your own dynamic allocations must reflect the needs and realities of your own company and its processes.

Example details

In this example, we're going to distribute benefit expenses across departments based on how salaries were distributed.

Our company has a Benefit Expense account group that contains the following accounts: 

  • 6110—Benefits - Life Insurance

  • 6120—Benefits - Health Insurance

  • 6130—Benefits - Retirement

These benefit expenses are all posted to a shared department. The goal of the allocation definition is to reallocate those expenses to specific departments using percentages that reflect how salaries were distributed across the same departments.

We do not want to change the amount of the account balances. Instead we're going to allocation portions of those balances to the following departments: 

  • 110—Campaigns

  • 120—Graphics

  • 130—Development

So the resulting journal entries will reallocate the expenses out of the 999—Shared department into the departments listed.

The amounts allocated to each department will be calculated based on how salaries were distributed across those departments. Intacct will analyze the journal entries posted to the Salaries and wages account group to determine the percentage for each department.

When you run the allocation, the benefit expenses are allocated using those same percentages.

Subscription

Dynamic Allocations

General Ledger

Regional availability

All regions

User type Business
Permissions
  • Account Allocation Definitions: List, View, Add, Edit, Delete
  • Generate account allocations: Add
  • View allocation log: List, View, Delete

Create the allocation definition

To create an allocation definition, go to General Ledger > Setup > Allocations and select Add (circle) next to Account allocation definitions.

Rationale

In the Rationale section, we want to identify the allocation definition and explain how we set it up.

Entries for the Rationale section
Field Value
Allocation ID Benefits
Description Allocate benefits across departments
Status Active
Methodology Base allocation on salary distribution

Dimension treatment

In the Dimension treatment section, we're going to specify whether this allocation is confined to one entity and how dimensions affect the allocation.

We're allocating the benefits expenses across departments, so Departments will be a focus of the allocation. We'll preserve the values of the location. Dimensions set to Preserve values keep their original values assigned during the initial entry.

Dimensions other than Department and Location, will be set to Not considered.

Entries for the Dimension treatment section
Field Value
Allow allocations Within one entity
Location Preserve values
Department Allocation focus
All other dimensions Not considered

Source pool

The Source pool section is where we specify what amounts are going to be allocated. In this case, the salary and benefits expenses are posted to the Accrual book.

Entries for the Source pool section
Field Value
Account group Benefit Expense
Percentage to allocate 100
Reporting book Accrual
Use amounts from Main reporting book and alternate books
Source pool time period Current month
True-up None
Entity or locations E100
Departments 999—Shared

Other than Entity or locations and Departments, leave the dimension filter fields blank.

Basis

In the Basis section, we specify how Intacct determines what portion of each benefits account balance will be allocated to each department.

Entries for the Basis section
Field Value
Allocation method Dynamic - relative account financial
Account group Salary and Wages Expense
Accumulation Activity
Reporting book Accrual
Use amounts from Main reporting book and alternate books
Basis time period Current month
Entity or locations E100

Other than Entity or locations, leave the dimension filter fields blank.

Target entry

In the target entry section, we tell Intacct where to post the journal entries that are created when you run the allocation.

The company posts all allocations to a user-defined Allocations journal.

Entries for the Target section
Field Value
Reporting book Accrual
Alternate book Allocations
Journal AJ--Allocations journal
(Allocation destination) Use source account

Select this checkbox to maintain the original balance in the source pool accounts. Portions of the account balances will be allocated to different dimensions, but the actual balances do not change.

To post the balances to a different account, deselect the checkbox and select the account.

For this example, select the checkbox.

(Reversing source pool) Use source account

Select this checkbox to use the same accounts selected in the Source pool section to reverse the transaction.

For this example, select the checkbox.

Breakdown of example

For our example, the following amounts were posted for January salaries for a total of 6,000.

January salaries
Account Department Location Debit or (Credit)
6000--Salaries 110--Campaigns E100 1,000
6000--Salaries 120--Graphics E100 2,000
6000--Salaries 130--Development E100 3,000
2000--Accounts Payable 999--Shared E100 6,000

Based on the amount posted to each department and the total, the allocation calculates the following percentages of salaries paid to each department.

Percentage of salaries paid to each department Percentage of salaries paid to each department
Department  
110--Campaigns 17%
120--Graphics 33%
130--Development 50%

The following amounts were posted for benefits: 

January benefits
Account Department Location Debit or (Credit)
6110--Benefits - Life Insurance 999--Shared E100 200
6120--Benefits - Health Insurance 999--Shared E100 400
6130--Benefits - Retirement 999--Shared E100 600
2000--Accounts Payable 999--Shared E100 (1,200)

Running the allocation will distribute the balance of the three benefit accounts to the Campaigns, Graphics, and Development departments using the percentages derived from the salary distribution.

The allocation will create three separate journal entries in the Allocations journal, one for each benefits expense account.

Journal entry for account 6110--Benefits - Life Insurance

Results of benefits allocation for Life Insurance
Account Department Location Debit or (Credit)
6110--Benefits - Life Insurance 110--Campaigns E100 34.00
6110--Benefits - Life Insurance 120--Graphics E100 66.00
6110--Benefits - Life Insurance 130--Development E100 100.00
6110--Benefits - Life Insurance 999--Shared E100 (200.00)

Journal entry for account 6120--Benefits - Health Insurance

Results of benefits allocation for Health Insurance
Account Department Location Debit or (Credit)
6120--Benefits - Health Insurance 110--Campaigns E100 66.67
6120--Benefits - Health Insurance 120--Graphics E100 133.33
6120--Benefits - Health Insurance 130--Development E100 200.00
6120--Benefits - Health Insurance 999--Shared E100 (400.00)

Journal entry for account 6130--Benefits - Retirement

Results of benefits allocation for Retirement
Account Department Location Debit or (Credit)
6130--Benefits - Retirement 110--Campaigns E100 100.00
6130--Benefits - Retirement 120--Graphics E100 200.00
6130--Benefits - Retirement 130--Development E100 300.00
6130--Benefits - Retirement 999--Shared E100 (600.00)

Run the allocation

After the salaries and benefits have been posted to General Ledger, run the allocation to allocate the benefits expense to the correct departments.

  1. Go to General Ledger > All > Account allocations > Generate allocation.

  2. Enter the GL posting date and Your email address.

  3. Enter the As of date.

  4. Select Individual allocation ID.

  5. In the Account allocation ID field, select the allocation definition that you created.

  6. Select Generate.

Review and verify the allocation

There are several ways to review the results of the allocation.

Reports

The most effective way to review your allocation and verify that amounts were moved in the way you expected is to run a financial report. Everyone's standard financial reports are different, so you can pick the statement type that works best for you.

Allocations can have many journal entry lines, which aren’t easy to review on a line by line basis to verify that the overall amounts went where they were intended. Sage Intacct recommends creating reports that show you the impact of your allocations, rather than review individual journal entries.

For our example, we're going to look at the Dimension Balances report, which is available on the General Ledger > All menu. The report shows the matches the expected balances for the benefits accounts as shown in the tables above.

Dimension balances reporting showing the account balances distributed across the Campaigns, Graphics, and Development departments.

Allocation journal entry

You can review the journal entry generated by the allocation.

  1. Go to General Ledger > All > Account allocations > View allocation log.
  2. Select View next to the allocation you want to view.
    The journal entry for the account allocation opens. Review the journal entries for your allocation at the bottom of the page.
This might be a lengthy process, depending on the number of journal lines for your allocation.

Automated allocation snapshot

You can go to the allocation snapshot to review the calculations that Intacct used based on your allocation definition.

  1. Go to General Ledger > All > Account allocations > Allocation log.

  2. Select View next to the allocation that you want to view.

    You'll see the list of journal entries created by the allocation, one for each account in the source pool account group.

  3. Select View next to one of the journal entries.

  4. Select the link under the Description heading.

    For this example, it will says something like "Allocated entry for Benefits." 

  5. On the Automated allocation snapshot page, select one of the following links: 
    • In the Source pool section, select the See source pool calculation link. An Excel file that contains the source pool information will be downloaded to your default downloads folder.
    • In the Basis section, select the See basis calculation link. An Excel file that contains the information that Intacct used for the basis calculation will be downloaded to your default downloads folder.
    • In the Target entry section, select the See dynamic split calculation. A window opens and shows the percentages that were used to allocate the benefits to the different departments.