Alternate Allocation Account Method in Dynamics GP

Do you use allocation accounts, like variable or fixed allocation accounts in Dynamics GP? These accounts are set up in the following windows:

Fixed Allocation Maintenance window

Cards | Financial | Fixed Allocation

Variable Allocation Maintenance

Cards | Financial | Variable Allocation

Allocation accounts are unlike typical posting accounts (Cards | Financial | Account) in several ways:

• When you post to them, they immediately allocate to the specified distribution accounts according to either fixed percentages or variable breakdown account balances.
• Because they do not store activity or history, you cannot report on them—you can only report on the resulting distribution accounts.
• They can be deleted at any time.

This can sometimes present a dilemma for users. You may like the fact that allocation happens automatically, but you may not like being unable to view the original amount posted. Consider the following example:

• You post $500 to fixed allocation account 123-4567-89
• The fixed allocation account then allocates to the distribution accounts as follows:
• Account 222-2222-22, 20 percent, $100
• Account 333-3333-33, 40 percent, $200
• Account 444-4444-44, 40 percent, $200
• Because you cannot inquire or report on the fixed allocation account, the only results in the general ledger (GL) would be the individual amounts posted to the individual distribution accounts. There would be no GL record of the original $500 amount posted to the allocation account.

For that reason, you may prefer the “alternate allocation method.” In this method, for each allocation account, you would need a corresponding posting account to hold the allocation activity for the period. Consider the following example:

• Post $500 to account 999-9999-99, which is configured as a standard posting account (Cards | Financial | Account).
• At month-end, or any other predefined interval (e.g., weekly), post a clearing entry (Transactions | Financial | Clearing Entry) to move the balance from 999-9999-99 to the allocation account 222-2222-22.
• At this point, it will allocate as described in the earlier example. The significance is we can see the full amount post to 999-9999-99 and then clear out to be allocated.

This alternate process also is beneficial in situations where you need to control the timing of the actual allocation. For example, you might want variable allocations to happen only at month-end, after the balances in the breakdown accounts have been updated. Or perhaps the percentages on a fixed allocation account are updated regularly, and you want to make sure allocations happen only after the update.

In general, the alternate allocation process can offer greater visibility of the allocation process within the general ledger without significant additional maintenance or procedures. For more information about using the alternate allocation process, or for assistance in setting up variable or fixed allocations, please contact our Microsoft Dynamics GP support center at gpsupport@bkd.com.