Intercompany Elimination-Process
Elimination subsidiaries required at parent level. The prerequisites required before eliminations are
- Creation of COA related to Elimination Which are Intercompany Revenue, Intercompany Expense, Intercompany Payable account & Intercompany Receivable account. The main point to be considered is check the ELIMINATE INTERCOMAPNY TRANSACTIONS thiswill enable the NetSuite to eliminate the transactions recorded in these COA
- We can take below structure as example
- While we are recording a sales transaction from East – West For $10000
In the books of East
Dr Intercompany receivable account $10000
Cr Intercompany revenue account $10000
In the books of West
Dr Intercompany expense account $10000
Cr Intercompany payable account $10000
- During consolidation, NetSuite reverses both sides of the intercompany transaction in elimination subsidiary.
- It debits Intercompany Revenue and credits Intercompany Receivable to eliminate the seller’s entries.
- Similarly, it debits Intercompany Payable and credits Intercompany Expense to remove the buyer’s entries.
- There is no change in the books of East and West subsidiary.
Elimination Entry
DR Intercompany Revenue $10000
DR Intercompany Payable $10000
CR Intercompany Expense $10000
CR Intercompany Receivable $10000
Process Flow
