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Reconciling intercompany transactions and eliminating entries with the transactional accounting model under IFRS
For companies that use the transactional model, you can collect data on intercompany transactions for reconciliation and exclude relevant entries when preparing consolidated financial statements. The reconciliation procedure uses accounting register data, and the entry elimination procedure uses document data. So, you can take full advantage of this functionality if you use the transactional model with document translation. You can use only reconciliation tools or only elimination tools.
Reconciling intercompany balance and turnover amounts
To reconcile balance and turnovers of group companies, use the Intercompany reconciliation by entries report.
The Intercompany reconciliation by entries report contains a table where each line displays information on a GL account and the corresponding balance/turnover amount by turnovers within the consolidation perimeter. For each GL account, the table shows the amount in the accounting of the company responsible for the reconciliation and the amount in the accounting of the counterparty used for the reconciliation. The amounts are displayed using the double-entry method.
The lines are grouped by companies, counterparties, and the Turnovers and Balance reconciliation sections. Discrepancies are calculated for each reconciliation section. The report displays accounts of the IFRS chart of accounts with the account category set to AR/AP accounting, Other assets/liabilities, Revenue, Cost, or Other income and expenses. With the report, you can drill down each generated amount to a document.
To set up the report, use the report command bar. You can specify a period, a chart of accounts to generate a report, companies for reconciliation, and a regulation to determine the company perimeter for reconciliation. The report displays information on all pairs of companies of the selected regulation for preparing reports unless the pair for reconciliation is specified in the settings.
Eliminating intercompany transactions
In the system, you can take advantage of the Intercompany transaction elimination tool. To eliminate intercompany transactions, make reversing entries with dimensions of the initial intercompany transaction entries of the eliminating company. When you add up an analytical trial balance of the company and an analytical trial balance of the eliminating company, intercompany transaction entries are excluded from the consolidated analytical trial balance.
Create an elimination document for each pair of companies. You can also create documents for all pairs of perimeter companies. To do this, set the period and the eliminating company on the command bar. The wizard will determine the company perimeter and pairs to create for each document. If the consolidation perimeter is small, click Create to create documents for elimination pairs without the wizard.
On the command bar of the elimination document, specify a period, an eliminating company, and a pair of companies to generate eliminating entries for. You can view intercompany transaction balance and turnovers of the company in cards of extra dimensions and eliminating entries that will be generated when posting the document.