Have you been struggling to understand the inner workings of R12 Intercompany and Intracompany balancing? Well, this is the best Metalink article we have found that clearly explains the setups and examples of all scenarios (ID 604441.1).
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Keeping with the theme, have you discovered the new AGIS System Option “Derive Intercompany Accounts from Intracompany Balancing Rules”? If no Intercompany rules were defined in 12.0.x then the process would error out. You may have noticed that this happened less often in later versions. In 12.1.x it was changed so that if no Intercompany rules were defined then the application will use the Intracompany All Other/All Other rule to pick the balancing accounts. This was done so that some clients could reduce their setups for Intercompany balancing. At the same time, the new AGIS system option was added. If the option is set to Yes and Intercompany accounts are not defined, then the Intercompany accounts will be derived from Intracompany rules. If the option is set to No, then Intracompany rules will not be used for intercompany accounts.