Examples of Elimination Entries

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 conversion 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.