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The following examples show how to eliminate intercompany transactions recorded in the InFusion ledgers during consolidation. The following assumptions apply to all examples.

  • The balances that must be eliminated in the consolidation are between entities within a ledger set.

  • The eliminations are accomplished by creating allocation rules using Calculation Manager.

  • The elimination adjustments are recorded in an elimination ledger.

Level One Elimination Entries

The first level of elimination entries is created for transactions between two InFusion North America ledgers (InFusion USA and InFusion Canada), and between two InFusion EMEA ledgers (InFusion UK and InFusion Germany). The elimination entries are recorded during the consolidation with their respective parent ledgers.

The following figure shows the InFusion North America ledger set. This ledger set includes the InFusion North America elimination ledger, the InFusion USA ledger, and the InFusion Canada ledger.

This figure shows the ledgers included in the InFusion
North America ledger set.

The following figure shows the InFusion EMEA ledger set. This ledger set includes the InFusion EMEA elimination ledger, the InFusion UK ledger, and the InFusion Germany ledger.

The figure shows the ledgers included in the InFusion
EMEA ledger set.

The following table shows the debits and credits for the first transaction where InFusion USA pays InFusion Canada 10,000 USD for copper wiring.

Ledger

Account

Debit

Credit

InFusion USA

Expense to InFusion Canada

10,000 USD

InFusion USA

Intercompany Payable to InFusion Canada

10,000 USD

InFusion Canada

Intercompany Receivable from InFusion USA

10,000 USD

InFusion Canada

Revenue from InFusion USA

10,000 USD

The following table shows the debits and credits for the elimination entry in the InFusion North America elimination ledger.

Account

Debit

Credit

InFusion USA Intercompany Payable

10,000 USD

InFusion USA Expense

10,000 USD

InFusion Canada Revenue

10,000 USD

InFusion Canada Intercompany Receivable

10,000 USD

The following table shows the debits and credits for the second transaction where InFusion UK pays InFusion Germany 5,000 EUR for manufactured technical components.

Ledger

Account

Debit

Credit

InFusion UK

Expense to InFusion Germany

5,000 EUR

InFusion UK

Intercompany Payable to InFusion Germany

5,000 EUR

InFusion Germany

Intercompany Receivable from InFusion UK

5,000 EUR

InFusion Germany

Revenue from InFusion UK

5,000 EUR

The following table shows the debits and credits for the elimination entry in the InFusion EMEA elimination ledger.

Account

Debit

Credit

InFusion UK Intercompany Payable

5,000 EUR

InFusion UK Expense

5,000 EUR

InFusion Germany Revenue

5,000 EUR

InFusion Germany Intercompany Receivable

5,000 EUR

Level Two Elimination Entries

Two additional intercompany transactions have taken place and must be eliminated when the four entities are all consolidated into the InFusion Corporate elimination ledger.

The following table shows the debits and credits for the third transaction where InFusion Germany pays InFusion USA 20,000 USD for technical products.

Ledger

Account

Debit

Credit

InFusion Germany

Expense to InFusion USA

20,000 USD

InFusion Germany

Intercompany Payable to InFusion USA

20,000 USD

InFusion USA

Intercompany Receivable from InFusion Germany

20,000 USD

InFusion USA

Revenue from InFusion Germany

20,000 USD

The following table shows the debits and credits for the fourth transaction where InFusion Canada pays InFusion UK 15,000 USD for copper rolls.

Ledger

Account

Debit

Credit

InFusion Canada

Expense to InFusion UK

15,000 USD

InFusion Canada

Intercompany Payable to InFusion UK

15,000 USD

InFusion UK

Intercompany Receivable from InFusion Canada

15,000 USD

InFusion UK

Revenue from InFusion Canada

15,000 USD

Final Elimination Entry at Corporate Level

The following elimination entries are based on the previous cross-ledger transactions. At different levels of the consolidation, certain intercompany payables and receivables balances must be eliminated. Eliminations are only required in the context of a consolidation where the trading parties are both included in a given consolidation.

The following figure shows the InFusion Corporate ledger set. This ledger set includes the InFusion Corporate primary ledger, the elimination ledgers for InFusion EMEA and InFusion North America, and the ledgers for InFusion USA, InFusion Canada, InFusion UK, and InFusion Germany. The figure also shows that transactions occurred between the following ledgers:

  • InFusion USA and InFusion Canada

  • InFusion UK and InFusion Germany

  • InFusion Germany and InFusion USA

  • InFusion Canada and InFusion UK

This figure shows the ledgers in the InFusion Corporate
ledger set and identifies which ledgers transact with each other.

The following table shows the elimination entries for InFusion Corporation, where the conversation rate of EUR to USD is 1.577.

Account

Debit

Credit

InFusion USA Payable

10,000 USD

InFusion Canada Receivable

10,000 USD

InFusion Germany Payable

20,000 USD

InFusion USA Receivable

20,000 USD

InFusion Canada Payable

15,000 USD

InFusion UK Receivable

15,000 USD

InFusion UK Payable

7,885 USD

InFusion Germany Receivable

7,885 USD

The following figure shows the consolidated balance sheet in US dollars.

The report has these columns: USA, Canada, UK, Germany, Eliminations, Total. The report has these rows: Total Assets, Total Liabilities, Total Stockholder's Equity, Total Liabilities and Equity. For the Eliminations column, the Total Assets row displays a negative amount of 52,885, and the Total Liabilities row displays a positive amount of 52,885.

This figure shows a consolidated balance sheet with the
elimination entries from the example.