Account Auto Elimination

In a group of Companies, it will often be the case that each Company will be a separate cost centre that will be invoiced when it uses resources belonging to another Company. These internal costs and income should not be included in turnover figures in the consolidated accounts. They should be removed from the consolidated accounts so that the figures for the group as a whole are correct.

In some cases, you can eliminate internal costs and income simply by using the same Account as the Sales Account in one subsidiary ("Daughter") and as the Cost Account in the second Daughter, or by consolidating the two Daughter Accounts to the same Account in the holding Company ("Mother" Company). Otherwise, you can eliminate the balances of Accounts used for this purpose using the Auto Eliminations setting together with the 'Account Auto Elimination' Maintenance function. This setting and Maintenance function are available in the Nominal Ledger and in the Consolidation module. You might use this method when internal transactions have been entered as sales in one Daughter and as purchases in another with slightly different values due to exchange rate differences, data entry errors, etc.

To use the Auto Eliminations feature, follow these steps:

  1. Enter a record in the Auto Eliminations setting. In this record, you should list the pairs of Accounts whose balances are to be eliminated (e.g. a Sales Account in one Daughter and a Cost Account in another Daughter). If you have not used dedicated Sales and Cost Accounts for inter-Company transactions, you may instead have marked inter-Company transactions with a particular Tag/Object. In this case, you can specify that the balances for particular Accounts and Tag/Objects in combination are to be eliminated. You should also specify whether the 'Account Auto Elimination' Maintenance function will create Simulations or Transactions.

  2. Run the 'Account Auto Elimination' Maintenance function. It will create a Simulation or Transaction that will reverse the balances of the specified Accounts (or of the specified Account and Tag/Object combinations).
You can use the 'Account Auto Elimination' function in two ways:
  1. If the Mother Company already contains the consolidated account balances from the Daughter Companies (i.e. if you have used the 'Consolidation' export function to export Transaction information from each Daughter Company which you have then imported to the Mother Company), you should run the function from the Mother Company, and you can do so from the Nominal Ledger or from the Consolidation module. The function will calculate the balances of the specified Accounts in the Mother Company only and then create a Simulation or Transaction that reverses those balances.

  2. If you have the Mother and Daughter Companies in the same database and you will be producing consolidated reports from the Mother Company without physically transferring any Daughter Company information to the Mother Company, you can run the function from any Company, but you must do so from the Consolidation module. The function will calculate the balances of the specified Accounts in all Companies and then create a Simulation or Transaction in the Mother Company that reverses those balances.
Please refer now to the following pages:
See also:

Maintenance functions in the Consolidation module:

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