Hi @dsenevirathne54 

Please elaborate your requirement. Do you want to exclude set of transactions in inter company transactions? or are you referring to excluding set of transactions in GL consolidation using a consolidation tenant?

Regards

Hi @vkumar,

When we do group consolidation in accounting we have to eliminate intercompany transaction effects.

Example : If company A has sold goods with a profit to company B, company A will have unrealized profit if the goods are not sold by company B. When we consider the group level we have to remove the unrealized profit from company A, otherwise, the group profit will be overstated. 

This is an accounting treatment in group consolidation. 

Thanks,

Dulanjana

@dsenevirathne54

You are technically correct as per IAS and GAAP but I have not seen any ERP system in the market that at the transactional level tracks the intercompany and has the ability to perform accurate eliminations.

As per the Accounting principle when we are given just one inventory that is purchased from a sister company and the same single item is still not sold or partially sold we can easily account for unrealized gains. In reality, companies have sometimes hundreds of thousands of inventory items from thousands of sources, and most of the time an item can be purchased from multiple sources. So with all these complications, the story is not really the same.

In the inventory example if you are purchasing specific items from sister companies. to some degree, you might be able to set up inventory groups and assign specific GL accounts and then you might be able to group those accounts together in the financial statement designer. But if you expect to click and eliminate all Interco transactions as per GAAP, you are putting a high hope in here.

What I mean is you can have specific Inventory Items for I/C stock items and assign Inventory, Sales and COGS accounts the same amongst all companies/branches. When an item is sold from a sister co to another the same inventory account of seller and buyer decreases and increases as for Sales and COGS. Then you can have an eliminating entry to net zero the difference between COGS and Inventory but it will involve some manual process any ways.

I tried Acumatica for a group of companies they have ~70 companies within the group and I couldn’t even get close to what my “Accounting Brain” expected.

Hi @aaghaei ,

Yes, I agree with your point. and thank you for your valuable input.

Thank you,

Dulanjana