Defining Elimination Rules

This section provides an overview of intercompany eliminations and discusses how to:

Establish elimination rules.
Specify elimination lines.
Define elimination targets.
Define out of balance options.
(Optional) Assign tolerance rules.
Establish elimination rule sets.
Establish elimination groups.

Pages Used To Define Elimination Rules

Page Name	Definition Name	Navigation	Usage
Elimination Rule	GC_ELIM_RUL_PG	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule	Define an elimination rule.
Elimination Rule - Elimination Lines	GC_ELIM_RUL_PG2	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Elimination Lines	Define which accounts you want to eliminate. When you define these accounts, the level of detail required depends on whether you are using the affiliate ChartField method.
Elimination Rule - Elimination Target Page	GC_ELIM_RUL_PG6	On the Elimination Rule - Elmination Lines page, click the Specify Elimination Target link to display the Elimination Target Page.	For each elimination line, specify to which dimension (ChartField) value the system books the elimination.
Elimination Rule - Out of Balance	GC_ELIM_RUL_PG5	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Out of Balance	Identify to which ChartFields any out of balance amounts that result from eliminating these intercompany transactions should be recorded.
Elimination Rule - Tolerance	GC_ELIM_RUL_PG3	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Tolerance	Specify the tolerance rule to use while processing eliminations.
Elimination Rule - Notes	GC_ELIM_RUL_PG4	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Notes	Record details about an elimination rule.
Elimination Rule Set	GC_ELIM_SET_PG	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule Set	Group individual elimination rules to identify all of the ChartFields that store intercompany transactions.
Elimination Rule Set - Notes	GC_ELIM_SET_PG2	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule Set, then select Notes	Record details about an elimination rule set.
Elimination Group	GC_ELIM_GRP_PG	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Group	Define the elimination rule sets that comprise an elimination group and the order in which to process them. Include all the elimination rule sets needed to describe every ChartField that stores intercompany transaction balances that you want the system to eliminate during processing.
Elimination Group - Notes	GC_ELIM_GRP_PG2	select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Group, then select Notes	Record details about an elimination group.

Understanding Elimination Rules

To eliminate transactions between entities in your organization, you set up individual elimination rules that identify a set of accounts that are used for interunit transactions, and should therefore be eliminated. These rules combine to create an elimination rule set. One or more elimination rule sets comprise an elimination group; a single elimination group is assigned to the consolidation model.

When the elimination process is run, intercompany amounts are eliminated. Any out of balance amounts are booked to the elimination entity attached to common node between the two entities with interunit transactions. You can view these entries on the trial balance inquiry and drill down to the consolidation log which provides details about which rule generated the entry. You can also run the match report or inquiry which compares all interunit activity and how it is eliminated.

See Processing Eliminations.

See Matching Intercompany Balances.

Methods for Defining Elimination Rules

The elimination group that you associate with the consolidation model must include every possible set of interunit transactions within your consolidation. A transaction can occur between two or more consolidation units, or from a consolidation unit to itself.

The way in which you set up elimination rules depends on how your organization records interunit transactions. Typically, you use one of these methods to record interunit transactions:

A single account records all interunit transactions, and the affiliate ChartField (dimension) specifies with which business unit the transaction occurred. If the source ledgers contain a ChartField to record with which affiliate the transaction took place, then the consolidation engine can match the affiliate values to correctly eliminate the intercompany transactions. Because fewer account numbers are used with the affiliate method, fewer elimination rule sets are required. To enable this option, select the Match Affiliate Value check box. on the Elimination Rule page

By using affiliate ChartField method, you only have to create one elimination rule. This is the preferred method.
A matching account is used for each business unit with which the transactions occur.

By using the matching account method, you have to create elimination rules for every set of units that do business with each other.

For example, the following interunit activity has been booked:

BU B0001 has booked receivables from BU B0003 for 1,000 EUR.

Conversely, BU B0003 has booked payables to BU B0001 for <1,000> EUR.
BU B0002 has booked receivables from BU B0001 for 5,000 EUR.

Conversely BU B0001 has booked payables to BU B0002 for <5,000> EUR.
BU B0003 has booked receivables from BU B0002 for 3,000 EUR.

Conversely BU B0002 has booked payables to BU B0003 for <3,000> EUR.

The following examples show how this interunit activity could be recorded by using either the affiliate ChartField method, or by using matching accounts.

If you use the affiliate ChartField method when generating interunit accounting entries, the consolidation engine determines which entries to eliminate by matching the affiliate ChartField (dimension) and business unit. This example shows intercompany payables and receivables among three business units using the affiliate ChartField method:

Business Unit	Account	Affiliate	Amount
B0001	140000—Due From/To Affiliates	B0002	<5,000>
B0001	140000—Due From/To Affiliates	B0003	1,000
B0002	140000—Due From/To Affiliates	B0001	5,000
B0002	140000—Due From/To Affiliates	B0003	<3,000>
B0003	140000—Due From/To Affiliates	B0001	<1,000>
B0003	140000—Due From/To Affiliates	B0002	3,000

Using the example above, in the case where the affiliate ChartField method is used, only one account is used for intercompany payables and receivables, and only one elimination rule is needed:

Elimination Rule	Business Unit	Account
A	N/A	140000—Due From/To Affiliates

If you add an affiliate, there is no need to update the rule.

If you do not use the affiliate ChartField when generating interunit accounting entries, then you need to identify matching accounts for elimination, because the system is unable to tell which transactions match. To specify the matching accounts, you need to create an elimination rule for each set of accounts that contain transactions with each other. You need to specify both the business unit and account number because the account could span multiple business units.

This example shows activity between business units using different ChartField values—in this case, different accounts—for intercompany transactions:

Business Unit	Account	Amount
B0001	142000—Due From/To B0002	<5,000>
B0001	143000—Due From/To B0003	1,000
B0002	141000—Due From/To B0001	5,000
B0002	143000—Due From/To B0003	<3,000>
B0003	141000—Due From/To B0001	<1,000>
B0003	142000—Due From/To B0002	3,000

For each affiliate, a set of separate Due From/To accounts is set up, and elimination rules will need to be defined for each set of affiliates that do intercompany transactions with each other.

In the case where different accounts were used for each transaction instead of the affiliate ChartField, the following elimination rules are needed:

Elimination Rule	Business Unit	Account
A	B001 B002	142000—Due From/To B0002 141000—Due From/To B0001
B	B001 B003	143000—Due From/To B0003 141000—Due From/To B0001
C	B002 B003	143000—Due From/To B0003 142000—Due From/To B0002

Elimination Rule

Business Unit

Account

B001

B002

142000—Due From/To B0002

141000—Due From/To B0001

B001

B003

143000—Due From/To B0003

141000—Due From/To B0001

B002

B003

143000—Due From/To B0003

142000—Due From/To B0002

Every time that you add a business unit, you will need to add new elimination rules for that affiliate, for each business unit that they have transactions with.

Elimination Rule Page

Use the Elimination Rule page (GC_ELIM_RUL_PG) to define an elimination rule.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule

Image: Elimination Rule page

This example illustrates the fields and controls on the Elimination Rule page. You can find definitions for the fields and controls later on this page.

An elimination rule defines a related group of intercompany accounts, for example intercompany payables and receivables. After amounts are eliminated, the balances of this group of accounts should normally net to zero. Optionally, to maintain a balanced journal entry, the system posts any amounts that remain after the elimination to the elimination entity attached to common node between the two entities with interunit transactions and the ChartField value specified on the Elimination Rule - Out of Balance page.

Ledger Template

Select the ledger template structure. This must be the same template used for your consolidation ledger. This value controls which ChartFields are available.

See Understanding Ledger Templates.

Match Affiliate Value

Check this box to use the Affiliate ChartField method to match up the amounts to be eliminated. The fields that appear on the Elimination Rule - Elimination Lines page vary based on this selection.

See Understanding Elimination, Non-Controlling Interest, and Equitization Rules.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit. If you checked Match Affiliate Value, you must specify the consolidation dimension for each rule.

See Understanding Business Units.

Data Processing Option

Select the data processing option that you want the elimination rule to use. Your options are Skip Previously Processed Data or Process All Data.

Select Skip Previously Processed Data to enable the system to process the data for this rule only if it has not been previously processed by another rule.
Select Process All Data to enable the system to process the data even if it has been previously processed by another rule.

Matching

The selections within the Matching group box pertain only to the matching report. These fields specify how the report categorizes the journal lines that result from this elimination rule.

Rule Lines are Self-Matching

Select if the elimination rule does not contain two distinct types of accounts (for example, if it contains only a generic due to or due from account). Or, if you do have distinct types of accounts (such as payables and receivables), select this check box if you do not want to match by account type. This then enables you to see all of one business unit's payables and receivables totals matched to another business unit's payables and receivables totals.

Clear this check box if the elimination rule contains two distinct types of accounts (for example, payable and receivable, or expense and revenue). Then enter descriptions for the two types of accounts in the Description for Match Group A and Description for Match Group B fields.

Elimination Rule - Elimination Lines Page

Use the Elimination Rule - Elimination Lines page (GC_ELIM_RUL_PG2) to define which accounts you want to eliminate.

When you define these accounts, the level of detail required depends on whether you are using the affiliate ChartField method.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Elimination Lines

Image: Elimination Rule - Elimination Lines page

This example illustrates the fields and controls on the Elimination Rule - Elimination Lines page. You can find definitions for the fields and controls later on this page.

Elimination lines identify which set of ChartField values describe an intercompany transaction. Typically, you define two or more lines for each elimination rule. These lines identify all of the partners within an intercompany transaction, and their balances should normally net to zero. For example, you could specify line one for intercompany receivables and line two for intercompany payables.

If you are using the affiliate method (that is, Match Affiliate Value is selected on the Elimination Rule page), the consolidation process is able to determine with which business unit the transaction occurred.

You do not need to specify the consolidation dimension value (for example, the specific ledger business unit) to eliminate.
If you are not using the affiliate method, the consolidation process is only able to eliminate the transactions identified by the elimination lines.

In that case, the system generates an elimination journal entry line to offset the transactions specified (debits or credits). You must specify the consolidation dimension value to eliminate (for example, the specific ledger business unit), as well as the account in the Values to Eliminate grid.

For each elimination line, complete these fields:

Line # (line number)

Enter a unique ID for each line associated with the elimination rule that you are defining. Add rows for additional lines.

Match Group

Use this option when creating the match report. Select the match group with which to associate this elimination. This field is available when you clear the Rule Lines are Self-Matching option on the Elimination Rule page.

Specify

This field controls how you want to specify the ChartField values to eliminate. Select one of the following options:

Select Values to enter specific ChartField values in the Values to Eliminate grid.
Select ChartField Value Set to specify a ChartField value set. You can either select a previously defined ChartField value set, or you can click the Create ChartField Value Set link to create a new one.

ChartField Value Set

This field is available for entry only when the Specify field is set to ChartField Value Set. Enter the ChartField value set that contains the ChartField values that you want to use within your elimination lines.

Specify Elimination Target

Click to transfer to the Elimination Rule - Elimination Target page, to specify the ChartField values to which the system books the eliminations during processing. You must specify an elimination target for each elimination line.

See Elimination Rule - Elimination Target Page.

Values To Eliminate

The Values To Eliminate grid is only used if you have selected Values in the Specify field for the elimination line. Add rows within the Values To Eliminate grid to specify additional ChartField values to eliminate.

Specify the field name and the ChartField value that you want to eliminate. You must select Account as one of the field names. Optionally, you can add rows and specify additional fields, such as Department. The fields (rows) that you include in the Values To Eliminate grid differ depending on whether the ChartField structure for your consolidation ledger uses the Affiliate field and whether you have selected the Match Affiliate Value check box on the Elimination Rule page. If you are not using the affiliate method, you must identify the consolidation dimension field value (such as the ledger business unit value) in addition to the other ChartFields.

Elimination Rule - Elimination Target Page

Use the Elimination Rule - Elimination Target page (GC_ELIM_RUL_PG6) to for each elimination line, specify to which dimension (ChartField) value the system books the elimination.

Navigation

On the Elimination Rule - Elmination Lines page, click the Specify Elimination Target link to display the Elimination Target Page.

Image: Elimination Rule - Elimination Target page

This example illustrates the fields and controls on the Elimination Rule - Elimination Target page. You can find definitions for the fields and controls later on this page.

For each line in the elimination rule, you must also specify an elimination target. The default option for each dimension specified is to retain the source value. The system then creates elimination entries that retain the dimension values of the input ledger lines and reverses the amounts. All elimination amounts are booked to the elimination unit. The elimination entry value is blank if you do not specify the dimension (ChartField). If a dimension is not included in the elimination target grid, when eliminations are processed, the value for the dimension is blank.

Get ChartFields

Click to populate the grid with all of the ChartFields or dimensions defined by the ledger template setup. Any target rows that you have already defined remain. You can then delete any rows that you do not need, and the system leaves those ChartField (or dimension) values blank.

Field Name

Select a dimension (ChartField) to use as a target.

Option

Select how the system should determine the ChartField value to use as a target. Options are:

Retain Source Value: Use the source elimination value as the target.

Use a Constant: Use a specific value as the target. Specify the value in the ChartField Value field.

ChartField Value

Specify the value to use as a target. This field is available for entry only when Option is set to Use a Constant. If you do not specify a ChartField value and the target option is Use a Constant, the system populates the ChartField value during processing as a blank and does not retain the source.

Elimination Rule - Out of Balance Page

Use the Elimination Rule - Out of Balance page (GC_ELIM_RUL_PG5) to identify to which ChartFields any out of balance amounts that result from eliminating these intercompany transactions should be recorded.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Out of Balance

Image: Elimination Rule - Out of Balance page

This example illustrates the fields and controls on the Elimination Rule - Out of Balance page. You can find definitions for the fields and controls later on this page.

There are two options for defining out of balance rules:

Calculate out-of-balance amounts.

If the elimination rule does not generate a balanced journal entry during processing, the system generates a journal line that debits or credits the out of balance account that you specify with the out of balance amount. If the amount of the journal is beneath the threshold, it is booked to the elimination entity at the tree node that is being processed.
Don't calculate out-of-balance-amounts.

The system creates elimination entries that are not required to balance, effectively creating a one-sided elimination of an account. In this case, elimination rules need to use accounts that are not required to be balanced, as defined in the balancing account type rule. Typically, this option is used for a financial statement ledger format.

Calculate Out of Balance

When selected, if the elimination rule does not generate a balanced journal entry during processing, the system generates a journal line that debits or credits the out of balance account that you specify on this page with that amount. Complete the remaining fields to indicate the target used to book any out of balance amounts.

Clear this check box to enable the system to create elimination entries that are not required to balance, effectively creating a one-sided elimination of an account. If you choose to do this, keep in mind that in order for the system to create a valid, postable journal, your elimination rules need to use accounts that aren't required to be balanced, as defined in the balancing account type rule. Typically, this option is used only with the financial statement consolidation ledger format.

If you select the Calculate Out of Balance option, complete the field names and values, as appropriate, for these group boxes to define the out of balance target:

Group Out of Balance By

The system groups the out of balance amounts by consolidation dimension and rule. Use the values specified for the Field Name and Value to indicate any additional ChartFields (dimensions) by which to group the out of balance amounts. For example, if your consolidation dimension is business unit, but you want to group out of balance amounts by department, you would select Department.

You can add rows to add multiple group by dimensions.

Out of Balance Debit

Indicate the ChartField values to which an out of balance debit should be posted. An account is required, but you can add additional ChartField values as needed, for example Flow Code

Out of Balance Credit

Indicate the ChartField values to which an out of balance credit should be posted. An account is required, but you can add additional ChartField values as needed.

Elimination Rule - Tolerance Page

Use the Elimination Rule - Tolerance page (GC_ELIM_RUL_PG3) to specify the tolerance rule to use while processing eliminations.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule, then select Tolerance

Image: Elimination Rule - Tolerance page

This example illustrates the fields and controls on the Elimination Rule - Tolerance page. You can find definitions for the fields and controls later on this page.

Tolerance Rule

Select the tolerance rule to use with this elimination rule. The system creates and posts journals when the amount by which a transaction is out of balance is less than the threshold specified in the tolerance rule. If the out of balance amount or percentage is greater than the threshold amount or percentage specified in the tolerance rule, the entire elimination entry does not get posted, however the system does create the elimination journal entry. Check the Send Tolerance Email box on the Run Control request page if you want the Contact defined on the Ledger Detail page to be notified of an out of tolerance condition.

Edit/View Tolerance Rule

Select to go the Tolerance Rule page and view or edit the specified tolerance rule.

Create Tolerance Rule

Select to go to the Tolerance Rule page and create a new tolerance rule.

Elimination Rule Set Page

Use the Elimination Rule Set page (GC_ELIM_SET_PG) to group individual elimination rules to identify all of the ChartFields that store intercompany transactions.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Rule Set

Image: Elimination Rule Set page

This example illustrates the fields and controls on the Elimination Rule Set page. You can find definitions for the fields and controls later on this page.

Ledger Template

Select the ledger template structure. This must be the same template used for your consolidation ledger. This value controls which ChartFields are available.

See Understanding Ledger Templates.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit.

Create Elimination Rule

Select to go to the Elimination Rule page and define a new elimination rule.

Elimination Rule grid

Specify all of the elimination rules to include in this elimination set, adding additional rows as needed.

Edit/View Rule

Select to go to the Elimination Rule page and view or edit the specified elimination rule.

Elimination Group Page

Use the Elimination Group page (GC_ELIM_GRP_PG) to define the elimination rule sets that comprise an elimination group and the order in which to process them.

Include all the elimination rule sets needed to describe every ChartField that stores intercompany transaction balances that you want the system to eliminate during processing.

Navigation

select Global Consolidations, then select Define Consolidations, then select Elimination Rules, then select Elimination Group

Image: Elimination Group page

This example illustrates the fields and controls on the Elimination Group page. You can find definitions for the fields and controls later on this page.

In the elimination group, include all of the elimination rule sets needed to describe each ChartField that stores intercompany balances that you want the system to eliminate during elimination processing.

Ledger Template

Select the ledger template structure. This must be the same template used for your consolidation ledger. This value controls which ChartFields are available.

See Understanding Ledger Templates.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit.

Elimination Rule Sets

Specify all of the elimination rule sets to include in this elimination group, adding additional rows as needed. Include all of the rule sets you need to identify every intercompany transaction balance requiring elimination. You assign one elimination group to a consolidation model.

Use Order

Enter the use order value. Rule set processing occurs in ascending order based on the number in this field. If you selected the data processing option, Skip Previously Processed Data for an elimination rule, and the same data exists in multiple rule sets, the first data encountered is used. If you selected the data processing option, Process All Data for an elimination rule, the data is processed again for the rule in the ruleset appearing in a later sequence order.