Understanding Elimination Rules

You can define how the system eliminates intercompany transactions at your source site. You define an elimination group of accounts by indicating a combination of company, business unit, object, subsidiary, subledger, and subledger type. Each elimination group can have multiple elimination rules that the system uses to determine whether the balance of an account should be eliminated when consolidating. The account balances within an elimination group should net to zero.

The system uses elimination rules to automatically eliminate intercompany transactions within the elimination group when you run the Process Consolidations program (R10550). Alternatively, you can specify an elimination account number to which the system enters the eliminating amount for the elimination group.

You also must specify a variance account to which the system enters the variance (write-off) amount for the elimination group if the account balances in the group do not net to zero. In addition, you can specify an elimination percentage for each elimination group if you do not want to eliminate 100 percent of an account balance.

When you run the Process Consolidations program, the system prints a report of the accounts and balances that were eliminated from the consolidation. The report also shows any variance amounts and the accounts where they were entered.

The system stores elimination rules and elimination groups in the Elimination Rules table (F10471).