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.
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The balances that must be eliminated in the consolidation are between entities within a ledger set.
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The eliminations are accomplished by creating allocation rules using Calculation Manager.
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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.
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 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.
- InFusion USA and InFusion Canada
- InFusion UK and InFusion Germany
- InFusion Germany and InFusion USA
- InFusion Canada and InFusion UK
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.