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    kkh229's Avatar
    kkh229 Posts: 3, Reputation: 1
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    #1

    Feb 21, 2008, 01:33 PM
    Consolidated elimination entries
    We have intercompany sales of say $100,000 between 2 companies. The selling company has the sale of $100,000 and the purchasing company is setting up the $100k as an asset. How do you eliminate that in a consolidation?

    Thanks
    Renaissance1967's Avatar
    Renaissance1967 Posts: 14, Reputation: 1
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    #2

    Aug 26, 2008, 10:17 PM
    I would set up an Intercompany Sales account and an Intercompany Payable account on each set of books and balance and close the totals during consolidation. This way ultimately there is just a transfer from inventory (seller) to asset (purchaser) with the applicable profit/loss posted on the seller. If you want to eliminate the profit/loss on consolidation then it must clear against the asset. I'm sure others may work this differently, but that's how I'd post it.
    In any event, however you are posting the entries on the two sets of books, the asset stays on the purchasing company side, but the sale should be eliminated on the selling company side.
    Enron ring any bells?
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