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Consolidations eliminations company

  • 1.  Consolidations eliminations company

    Posted Apr 06, 2021 01:25 AM
    Hello, I'm looking into setting up consolidations between multiple companies we have in the system. Searching online I have seen mentioned to set up an eliminations company. Does anyone have more information or how this would work?

    The only material I can find on eliminations is doing them manually so not sure how a stand alone eliminations company would work

    Thanks!


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    andy doghart
    homecorp
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  • 2.  RE: Consolidations eliminations company

    NAVUG ALL STAR
    Posted Apr 06, 2021 11:11 AM
    Elimination companies are mainly used when consolidating multiple companies which make transactions between themselves.  For example, company A sells products to company B.  While it is proper to show the sales and COGS on company A's books when looking at company A individually, the sale would need to be eliminated when looking at the consolidated statements since the combined companies did not really have sales.  The elimination company removes the impact of intercompany transactions.  The screenshot below is an example of what the elimination company would post for a specific transaction.  BC/NAV generally suggests making the elimination entries directly in the consolidation company, but many accountants like having the separate company in the system.


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    David Wiser
    Sr. Solution Consultant
    Tigunia
    BCUG|NAVUG Board of Advisors
    BCUG|NAVUG Programming Committee
    BCUG|NAVUG All-Star
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  • 3.  RE: Consolidations eliminations company

    SILVER CONTRIBUTOR
    Posted Apr 08, 2021 09:36 AM
    Can this work if companies are different exchange rates and need to be consolidated into USD?

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    Deb Peters
    Director of Finance, HR & IT
    Midwest Rubber Service & Supply
    Plymouth MN
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  • 4.  RE: Consolidations eliminations company

    Posted Apr 08, 2021 10:14 AM
    Hi Deb,

    Yes, absolutely.  I work/live in Canada and almost all Canadian companies deal in foreign currency.  Each NAV/BC company will have its own currency and the parent company will be USD (in your case).  When you consolidate, NAV/BC will ask you what the currency of the parent company is and you enter USD.  No matter which method you use (David's, Jay's or mine) they can all work with different currencies.  It will be a little more difficult to try to eliminate the FX variance though but totally doable.

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    Jimmy Yu
    Enterprise Architect
    Step Energy Services Inc
    AB
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  • 5.  RE: Consolidations eliminations company

    Posted Apr 07, 2021 01:31 AM
    Hello Andy,

    Adding to David's response, the way i have handled Consolidations & Eliminations is to have a Dimension called Eliminations with Dimension Values '0' = Non-Eliminating & '1' = Elimination.
    I then add the relevant value to the respective GL Codes.
    This then makes it easy enough to be able to pick up what is eliminated and what is not.

    Hope this helps.

    Regards,

    Jay

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    Jay Hari
    0421504199
    Hamlyn Terrace NS
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  • 6.  RE: Consolidations eliminations company

    Posted Apr 07, 2021 11:11 AM
    What I've seen/done at my last 4 companies is to create a Business Unit in the Consolidated/combined/parent company called E-xxxx.  The xxx indicates the actual business unit.  In David's example, this would be E-CompanyA or E-CompanyB.  Enter the elimination journal entry in the Consolidated company using the Business Unit Code E-CompanyA and E-CompanyB.

    However, in saying this, I've personally preferred David's method of creating a completely separate company but have never been successful in convincing the company I work for to follow through with this method.

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    Jimmy Yu
    Enterprise Architect
    Step Energy Services Inc
    AB
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