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How To Create An Allocation Rule

This article includes suggestions and workarounds. Content may not be accurate for all use cases or represent best practices for the latest release.

Question

How do I create an Allocation Rule and do the different options control?

Answer

How to Create an Allocation Rule

Objective: Allocate total Rent Expense based on Department Headcount.

Step 1: Create your Allocation Accounts as System Accounts

System Accounts are special GL or Custom accounts used for allocations. This type of account can only be populated by the system, does not accept imports, and is marked in the accounts list on the Manage Your Accounts screen with a gear icon.

1. Navigate to Modeling > General Ledger Accounts or Manage Your Custom Accounts.
2. Select New System Account.


3. Name the account Facilities Allocation In and Save.


4. Create a second System Account named Facilities Allocation Out.


5. You should now have two allocation system accounts indicated by the gear icon.

 

 

 

Step 2: Create Your Allocation Rule

1. Navigate to Modeling > Allocation Rules.
2. Select New Rule.
3. Populate the Definition tab.

a. Name – This should be the name of the rule, Facilities Allocation.

Note: You should be sure to use a descriptive name because the rule name will show up in the Allocation Rules list as well as in Cell Explorer.

b. Description – This field is optional.

c. Source Levels - The levels from which this rule will allocate out values, Finance.

d. Target Levels - The levels into which this rule will allocate in values, All Levels.

e. Allocate-Out Account - The system account into which the rule will place the offsetting amount being allocated out from each source level, Facilities Allocation Out.

Note: Only system accounts are displayed in this selector.

f. Allocate-In Account - The system account into which the rule will place the amount being allocated into each target level, Facilities Allocation In.

Note: Only system accounts are displayed in this selector.

g. Allocate-Out Value - The amount to be allocated out from each source level, 6470 Office Rent.

h. Weight Formula - Describes how the allocated-in values should be distributed among the target levels, Headcount.

Note: The formula given here will be evaluated on each target level and used as a weight for the inbound allocation.


4. Populate the Scope tab.

a. Applies to Versions - Use search or scroll to select the versions to which the rule applies, 2013 Q1 Forecast.

b. Rule Period - Select the time period to which the rule applies.

c. Preserve Dimensions - Choose which, if any, dimensions should be preserved during allocation. If no dimensions are selected, the target levels of the allocation will receive allocate-in amounts that are uncategorized in any dimension.


 

Step 3: Validate Your Rule

You can create a report to determine if your allocation rule is working as expected. For example, in this report we can see that the 12,495 Office Rent expense is correctly allocating out of the Finance level. Then, it is allocating into Northwest Sales based on Personnel Headcount.


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