When you enter intercompany transactions and advanced intercompany journal entries to record business activity between subsidiaries, the system identifies transaction lines that require elimination.
- Intercompany sales and billing transaction lines are identified by default, based on the intercompany account with which the line is associated.
- An intercompany sales order is a nonposting transaction, a transaction that has no general ledger impact. However, when the sales order is invoiced, the system identifies the transaction lines that require elimination for posting to intercompany accounts.
- The same is true for intercompany purchase orders. An intercompany purchase order is a nonposting transaction. However, when the purchase order is billed, the system identifies transaction lines that require elimination for posting to intercompany accounts.
- Intercompany inventory transfers and intercompany drop shipments are identified by default. They are based on the intercompany account associated with the line on related purchase orders and sales orders.
- Journal lines that require elimination at period end are identified either by default. They are based on the intercompany account entered for the line, or by manually checking the line for elimination.
- At the end of the accounting period, complete the tasks in your Period Close Checklist. The last task on the checklist is Eliminate Intercompany Transactions. You can complete this task only after completing the Revalue Open Foreign Currency Balances and Calculate Consolidated Balances tasks.
- You must complete these two tasks first to ensure that foreign currency adjustment amounts have been calculated for transactions in the period.
- When you run intercompany elimination, NetSuite creates elimination journal entries for all intercompany transaction journal lines that have the Elimination box checked.
- Adjustments that result from the difference in the foreign currency exchange rates post to the Cumulative Translation Adjustment-Elimination (CTA-E) account. These differences occur from the originating intercompany journal entry and the elimination journal entry.
- NetSuite also creates a reversing journal entry for all intercompany journal lines that post to Intercompany Receivables and Intercompany Payables.