Consolidation & Elimination
Consolidation combines financial data from multiple subsidiaries into unified financial statements, while elimination removes intercompany transactions to avoid double-counting.
Consolidation Overview
Consolidation Process Flow
═══════════════════════════════════════════════════════════════════════════════
SUBSIDIARY FINANCIALS
─────────────────────
┌──────────────┐ ┌──────────────┐ ┌──────────────┐
│ USA Sub │ │ UK Sub │ │ Germany Sub │
│ Revenue: $1M │ │ Revenue: £500K│ │ Revenue: €400K│
│ (in USD) │ │ (in GBP) │ │ (in EUR) │
└──────┬───────┘ └──────┬───────┘ └──────┬───────┘
│ │ │
▼ ▼ ▼
┌─────────────────────────────────────────────────┐
│ CURRENCY TRANSLATION │
│ ─────────────────────────────────────────── │
│ UK: £500K × 1.25 = $625K │
│ Germany: €400K × 1.10 = $440K │
└─────────────────────┬───────────────────────────┘
│
▼
┌─────────────────────────────────────────────────┐
│ SIMPLE AGGREGATION │
│ ─────────────────────────────────────────── │
│ USA: $1,000K │
│ UK: $625K │
│ Germany: $440K │
│ ───────────────── │
│ Total: $2,065K │
└─────────────────────┬───────────────────────────┘
│
▼
┌─────────────────────────────────────────────────┐
│ INTERCOMPANY ELIMINATION │
│ ─────────────────────────────────────────── │
│ IC Revenue (USA to UK): ($100K) │
│ IC Revenue (USA to Germany): ($50K) │
│ ───────────────────────────── │
│ Total Eliminations: ($150K) │
└─────────────────────┬───────────────────────────┘
│
▼
┌─────────────────────────────────────────────────┐
│ CONSOLIDATED FINANCIALS │
│ ─────────────────────────────────────────── │
│ Consolidated Revenue: $1,915K │
│ (External revenue only) │
└─────────────────────────────────────────────────┘
Elimination Subsidiary Setup
Creating an Elimination Subsidiary
Navigation: Setup > Company > Subsidiaries > New
Elimination Subsidiary Configuration
═══════════════════════════════════════════════════════════════════════════════
┌─ Subsidiary Record ──────────────────────────────────────────────────────────┐
│ │
│ Name: Corporate Eliminations │
│ │
│ Parent: [▼ Parent Company (Top-Level) ] │
│ │
│ Subsidiary Type: ○ Operating │
│ ● Elimination ← Select this │
│ │
│ Country: [▼ United States (or Parent country)] │
│ │
│ Currency: [▼ USD (Parent currency) ] │
│ │
│ ☐ Inactive │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
PURPOSE:
─────────────────────────────────────────────────────────────────────────────
• Records elimination entries only
• No operating transactions
• Offsets intercompany balances
• Shows as separate line in consolidated reports (optional)
Elimination Subsidiary Position
Hierarchy Placement
═══════════════════════════════════════════════════════════════════════════════
CORRECT PLACEMENT:
─────────────────────────────────────────────────────────────────────────────
Parent Company
│
┌────────────────┼────────────────┬───────────────────┐
│ │ │ │
USA Sub UK Sub Germany Sub Eliminations
(Operating) (Operating) (Operating) (Elimination)
│
All elimination
entries post here
The Elimination subsidiary should be:
• At the same level as operating subsidiaries
• Child of the parent company
• Used for all consolidated eliminations
Intercompany Account Configuration
Flagging Accounts for Elimination
Navigation: Lists > Accounting > Accounts > [Select Account] > Edit
Account Setup for Elimination
═══════════════════════════════════════════════════════════════════════════════
┌─ Account Record ─────────────────────────────────────────────────────────────┐
│ │
│ Number: 4500 │
│ Name: Intercompany Revenue │
│ Type: Income │
│ │
│ Intercompany Elimination: │
│ ───────────────────────── │
│ │
│ ☑ Eliminate Intercompany Transactions │
│ ↑ │
│ This checkbox marks the account for automatic elimination │
│ │
│ Elimination Account: [▼ 4500 - IC Revenue (same account) ] │
│ ↑ │
│ Account to use in elimination entry │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
Required Elimination Accounts
Accounts That Should Be Flagged for Elimination
═══════════════════════════════════════════════════════════════════════════════
BALANCE SHEET:
─────────────────────────────────────────────────────────────────────────────
☑ 1150 - Intercompany Receivable
☑ 2150 - Intercompany Payable
☑ 3100 - Investment in Subsidiaries (if applicable)
INCOME STATEMENT:
─────────────────────────────────────────────────────────────────────────────
☑ 4500 - Intercompany Revenue
☑ 4510 - IC Product Revenue
☑ 4520 - IC Service Revenue
☑ 5500 - Intercompany COGS
☑ 6500 - Intercompany Expenses
☑ 6510 - IC Service Expense
☑ 6520 - IC Management Fee Expense
☑ 7500 - Intercompany Interest Income
☑ 8500 - Intercompany Interest Expense
EQUITY (if applicable):
─────────────────────────────────────────────────────────────────────────────
☑ 3200 - Additional Paid-in Capital (for IC capital transactions)
Elimination Methods
Automatic Elimination
Automatic Elimination Process
═══════════════════════════════════════════════════════════════════════════════
ENABLE AUTO-ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
Setup > Company > Enable Features > Company
☑ Intercompany Auto Elimination
HOW IT WORKS:
─────────────────────────────────────────────────────────────────────────────
When you run a consolidated report:
1. System identifies all transactions in accounts flagged for elimination
2. System matches intercompany transactions between subsidiaries
3. System calculates elimination amounts:
• IC Revenue in Sub A = IC Expense in Sub B
• IC Receivable in Sub A = IC Payable in Sub B
4. Elimination entries are calculated "on the fly" for reporting
5. Report shows:
┌───────────────────────────────────────────────────────────────────────┐
│ Revenue │
│ ───────────────────────────────────────────────────────────────── │
│ USA Subsidiary: $1,000,000 │
│ UK Subsidiary: $625,000 │
│ Germany Subsidiary: $440,000 │
│ Eliminations: ($150,000) ← Auto-calculated │
│ ───────────────────────────────────── │
│ Consolidated Total: $1,915,000 │
└───────────────────────────────────────────────────────────────────────┘
IMPORTANT: Auto-elimination is for REPORTING only
Does not create actual journal entries
Eliminations recalculate each time report runs
Manual Elimination Journal Entries
Manual Elimination Entries
═══════════════════════════════════════════════════════════════════════════════
WHEN TO USE MANUAL ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
• Complex eliminations (goodwill, fair value adjustments)
• Non-standard intercompany arrangements
• Audit requirements for posted entries
• Historical corrections
EXAMPLE: Manual IC Revenue/Expense Elimination
─────────────────────────────────────────────────────────────────────────────
Transaction: Journal Entry
Subsidiary: Corporate Eliminations
┌─────────────────────────────────┬────────────┬────────────┬─────────────┐
│ Account │ Debit │ Credit │ Elim Sub │
├─────────────────────────────────┼────────────┼────────────┼─────────────┤
│ 4500 IC Revenue │ $100,000 │ │ USA │
│ 5500 IC COGS │ │ $70,000 │ USA │
│ 6500 IC Expense │ │ $100,000 │ UK │
│ 1200 Inventory (IC Profit) │ │ $30,000 │ UK │
│ 5500 COGS (IC Profit Release) │ $30,000 │ │ UK │
│ 1200 Inventory │ $70,000 │ │ UK │
└─────────────────────────────────┴────────────┴────────────┴─────────────┘
This entry:
• Eliminates IC revenue and expense ($100K)
• Eliminates unrealized profit in inventory ($30K)
• Posted in Elimination subsidiary
Period-End Consolidation Process
Consolidation Checklist
Period-End Consolidation Steps
═══════════════════════════════════════════════════════════════════════════════
PHASE 1: SUBSIDIARY CLOSE (Each subsidiary)
─────────────────────────────────────────────────────────────────────────────
□ Complete all transactions for the period
□ Run subsidiary-specific reconciliations
□ Post adjusting journal entries
□ Complete inventory counts/adjustments
□ Run depreciation/amortization
□ Review open AR/AP aging
PHASE 2: INTERCOMPANY RECONCILIATION
─────────────────────────────────────────────────────────────────────────────
□ Generate IC balance report
□ Reconcile IC receivables to IC payables
□ Investigate and resolve discrepancies
□ Complete IC settlements (if required)
□ Document any remaining IC differences
PHASE 3: CURRENCY OPERATIONS
─────────────────────────────────────────────────────────────────────────────
□ Update exchange rates to period-end rates
□ Run FX revaluation for each subsidiary
□ Review unrealized FX gains/losses
□ Post revaluation entries
PHASE 4: ELIMINATION REVIEW
─────────────────────────────────────────────────────────────────────────────
□ Review auto-elimination calculations
□ Post manual elimination entries (if needed)
□ Verify elimination accounts balance
□ Check for unrealized IC profit in inventory
PHASE 5: CONSOLIDATED REPORTING
─────────────────────────────────────────────────────────────────────────────
□ Run consolidated trial balance
□ Generate consolidated financial statements
□ Review consolidation for unusual items
□ Prepare consolidation reconciliation
□ Archive consolidation documentation
PHASE 6: PERIOD LOCK
─────────────────────────────────────────────────────────────────────────────
□ Close period for all subsidiaries
□ Lock eliminated entries
□ Generate final consolidated package
Timeline Example
Monthly Close Timeline
═══════════════════════════════════════════════════════════════════════════════
Month-End Close Calendar
─────────────────────────
Day 1-3: Subsidiary transaction cutoff
Day 2-4: Subsidiary adjusting entries
Day 3-5: IC reconciliation
Day 4-6: FX revaluation
Day 5-7: Manual eliminations (if needed)
Day 6-8: Consolidated report review
Day 7-9: Management review and signoff
Day 10: Period close and lock
─────────────────────────────────
Total: 10 business days
Elimination Examples
Revenue/Expense Elimination
IC Revenue/Expense Elimination
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: USA sells services to UK for $100,000
BEFORE ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
USA P&L:
IC Service Revenue: $100,000
UK P&L:
IC Service Expense: £80,000 ($100,000)
Simple Sum (Wrong):
Revenue: $100,000
Expense: $100,000
Double-counted: $100,000
ELIMINATION ENTRY:
─────────────────────────────────────────────────────────────────────────────
┌─────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├─────────────────────────────────┼────────────┼────────────┤
│ 4520 IC Service Revenue │ $100,000 │ │
│ 6510 IC Service Expense │ │ $100,000 │
└─────────────────────────────────┴────────────┴────────────┘
AFTER ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
Consolidated P&L:
IC Service Revenue: $0
IC Service Expense: $0
Net Impact: $0 (correct - internal transaction)
Receivable/Payable Elimination
IC Receivable/Payable Elimination
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: USA has $50,000 receivable from UK
BEFORE ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
USA Balance Sheet:
IC Receivable - UK: $50,000 (Asset)
UK Balance Sheet:
IC Payable - USA: £40,000 ($50,000) (Liability)
Simple Sum (Wrong):
Total Assets include $50,000 IC Receivable
Total Liabilities include $50,000 IC Payable
Both overstate consolidated position
ELIMINATION ENTRY:
─────────────────────────────────────────────────────────────────────────────
┌─────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├─────────────────────────────────┼────────────┼────────────┤
│ 2150 IC Payable │ $50,000 │ │
│ 1150 IC Receivable │ │ $50,000 │
└─────────────────────────────────┴────────────┴────────────┘
AFTER ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
Consolidated Balance Sheet:
IC Receivable: $0
IC Payable: $0
Net Impact: $0 (correct - internal balance)
Unrealized Profit in Inventory
Unrealized IC Profit Elimination
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: USA sells inventory to UK at markup, UK hasn't sold externally yet
TRANSACTION:
─────────────────────────────────────────────────────────────────────────────
USA cost: $70,000
USA sells to UK: $100,000
USA IC Profit: $30,000
UK inventory value: $100,000 (at IC purchase price)
UK hasn't sold yet - inventory on hand at period end
PROBLEM:
─────────────────────────────────────────────────────────────────────────────
USA recognized $30,000 profit
But from consolidated view, inventory hasn't been sold externally
Profit is "unrealized" until UK sells to external customer
ELIMINATION ENTRIES:
─────────────────────────────────────────────────────────────────────────────
1. Eliminate IC Revenue/COGS:
┌─────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├─────────────────────────────────┼────────────┼────────────┤
│ 4500 IC Revenue │ $100,000 │ │
│ 5500 IC COGS │ │ $70,000 │
│ 1200 Inventory │ │ $30,000 │
└─────────────────────────────────┴────────────┴────────────┘
2. When UK eventually sells externally, reverse the inventory adjustment
RESULT:
─────────────────────────────────────────────────────────────────────────────
Consolidated view:
• No IC revenue/COGS recognized
• Inventory at consolidated cost ($70,000)
• Profit recognized only when sold externally
Investment in Subsidiary
Investment Elimination
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: Parent invested $1,000,000 in subsidiary
BEFORE ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
Parent Balance Sheet:
Investment in UK Sub: $1,000,000 (Asset)
UK Balance Sheet:
Share Capital: £800,000 ($1,000,000) (Equity)
Simple Sum (Wrong):
Parent shows investment as asset
Sub shows equity
Both represent same economic value
ELIMINATION ENTRY:
─────────────────────────────────────────────────────────────────────────────
┌─────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├─────────────────────────────────┼────────────┼────────────┤
│ 3100 Share Capital (UK) │ $1,000,000 │ │
│ 3100 Investment in Sub (Parent) │ │ $1,000,000 │
└─────────────────────────────────┴────────────┴────────────┘
AFTER ELIMINATION:
─────────────────────────────────────────────────────────────────────────────
Consolidated Balance Sheet:
Investment in Sub: $0
Sub's Share Capital: $0 (eliminated)
Retained Earnings: Subsidiary R/E flows through
SuiteQL Queries
Elimination Transactions
-- Find all elimination entries
SELECT
t.tranid,
t.trandate,
t.memo,
s.name AS subsidiary,
tl.account,
a.acctnumber,
a.accountsearchdisplayname AS account_name,
tl.debit,
tl.credit
FROM
transaction t
JOIN transactionline tl ON t.id = tl.transaction
JOIN account a ON tl.account = a.id
JOIN subsidiary s ON t.subsidiary = s.id
WHERE
s.iselimination = 'T'
AND t.trandate >= TO_DATE('2025-01-01', 'YYYY-MM-DD')
ORDER BY
t.trandate DESC, t.tranid
IC Balance Check
-- Verify IC accounts net to zero across all subsidiaries
SELECT
a.acctnumber,
a.accountsearchdisplayname AS account_name,
SUM(CASE WHEN tal.amount > 0 THEN tal.amount ELSE 0 END) AS total_debits,
SUM(CASE WHEN tal.amount < 0 THEN ABS(tal.amount) ELSE 0 END) AS total_credits,
SUM(tal.amount) AS net_balance
FROM
transactionaccountingline tal
JOIN account a ON tal.account = a.id
JOIN transaction t ON tal.transaction = t.id
WHERE
a.eliminate = 'T' -- Accounts flagged for elimination
AND t.posting = 'T'
GROUP BY
a.acctnumber, a.accountsearchdisplayname
HAVING
ABS(SUM(tal.amount)) > 0.01
ORDER BY
ABS(SUM(tal.amount)) DESC
Troubleshooting
Common Elimination Issues
| Issue | Cause | Solution |
|---|---|---|
| IC balances don't match | Timing, FX, or entry errors | Reconcile before elimination |
| Elimination imbalance | One-sided entries | Review paired transactions |
| Missing elimination | Account not flagged | Check elimination checkbox |
| Double elimination | Manual + auto elimination | Use one method consistently |
| FX variance in elimination | Rate differences | Use consistent rates |
Validation Checks
Pre-Consolidation Validation
═══════════════════════════════════════════════════════════════════════════════
CHECK 1: IC Receivable = IC Payable
─────────────────────────────────────────────────────────────────────────────
Sum of all IC Receivables across subs
Should equal
Sum of all IC Payables across subs
(After currency translation)
CHECK 2: IC Revenue = IC Expense
─────────────────────────────────────────────────────────────────────────────
Sum of all IC Revenue across subs
Should equal
Sum of all IC Expense across subs
(After currency translation)
CHECK 3: Elimination entries balance
─────────────────────────────────────────────────────────────────────────────
Total Debits in Elimination subsidiary
Should equal
Total Credits in Elimination subsidiary
CHECK 4: Consolidated accounts balance
─────────────────────────────────────────────────────────────────────────────
After elimination:
IC Receivable accounts = $0
IC Payable accounts = $0
IC Revenue accounts = $0
IC Expense accounts = $0
Related Documentation
- Intercompany Settlement - Clearing IC balances
- Multi-Currency Operations - Currency translation
- Consolidated Reporting - Financial statement generation
- System-Generated Journals - Auto-elimination entries