Eliminate Intercompany Transactions

Note

This step is required only if intercompany transactions were posted during the accounting period.

After all currency translations are complete, eliminate intercompany balances and transactions before generating consolidated financial statements.

Run the Elimination Process

Open the Consolidation Period End Closing record and click Eliminate Intercompany Transactions.

GoldFinch analyzes all intercompany activity for the consolidation period and automatically creates the required elimination entries.

Intercompany Elimination Processing

During the elimination process, GoldFinch automatically:

• Identifies intercompany transactions between subsidiaries.
• Generates General Journal entries to reverse the intercompany activity.
• Converts elimination amounts to the parent company's reporting currency when necessary.
• Posts all elimination entries to the designated Elimination GL Ledger.

This removes intercompany receivables, payables, revenue, expenses, and other internal transactions from the consolidated financial statements.

Bank Account Handling

Intercompany elimination entries should never be posted directly to Bank Account GL Accounts.

If an automatically generated elimination journal contains a bank account, replace the Bank Account GL Account with an Undeposited Funds GL Account before posting the journal.

Using Undeposited Funds supports both of the following situations:

• The source company has paid the funds, and the destination company has already received them during the same accounting period.
• The source company has paid the funds, but the destination company has not yet received them as of the consolidation date (cash in transit).

This approach eliminates the intercompany transaction without creating artificial bank activity in the consolidated financial statements.

Currency Translation Differences

During elimination, small balancing differences may occur because subsidiaries use different exchange rates or base currencies.

GoldFinch automatically posts these differences to the Cumulative Translation Adjustment (CTA) Account configured in Company Setup.

The CTA account:

• Records exchange-rate differences arising during consolidation.
• Keeps elimination journals balanced in the parent company's reporting currency.
• Separates currency translation adjustments from operating income.

Review and Post Elimination Journals

After the elimination journals are generated:

1. Review each journal for accuracy.
2. Replace any Bank Account GL Accounts with Undeposited Funds, if necessary.
3. Verify that all elimination entries are balanced.
4. Post the elimination journals to the Elimination GL Ledger.

Once the elimination journals have been posted, the consolidation is complete and the consolidated financial statements can be generated from the Parent Consolidation GL Ledger.