When I present about Oracle Intercompany products I always start with a couple of slides explaining the difference between Intercompany and Intracompany and why we might care about the difference. This is sometimes obvious but often the two terms are used interchangeably or the term Intercompany is used generically to discuss Inter and Intra company (Oracle Apps is certainly guilty of the latter). So here goes...
InterCompany Transactions are between two or more related internal legal entities with common control, i.e. in the same enterprise (Inter = Latin for "BETWEEN")
IntraCompany Transactions are between two or more entities within the same legal entity (Intra = Latin for "WITHIN")
So that's it then and a free latin lesson to boot. No? Want more?
Well the real difference is that Intracompany processing is determined by company management, whereas Intercompany has to follow the law.
The amount the R&D department pays the manufacturing department of the same LE for some test chips(of the silicon kind) is to be sorted out between themselves. However when my manufacturing company in Ireland sell chips to their sister company in Germany you can imagine the tax authorities care about how much they charge because they get a % of it in taxes. This what transfer pricing is all about, it is important to get it right and you need to follow the rules and be prepared to open up your books to the tax people to demonstrate you followed the rules.
In R12 we have changed the way you set up the accounts formerly known as Intercompany accounts. You can enter Intercompany Accounts which are between pairs of Legal Entities, regardless of the ledger, chart of accounts, etc they are on. There is also the Intracompany Accounts screen where the accounts are defined from BSV to BSV with all the options that are available in 11i. More on this in later posts.
UPDATE: I have written a number of new related posts