RE: Intercompany consolidation automatic eliminations
Hi Tom,
I have a problem with passing elimination entries for our foreign subsidiary company. when we have consolidated the foreign subsidiary which use an other reporting currency, the entices related to the foreign subsidiary will automatically convert to the local currency within the consolidation company after we have run the consolidation process (balance sheet @ closing rate and income statement @ average rate).
Assume, I have run the consolidation for the January and passed the elimination entry related to the foreign subsidiary
within the consolidation company (for balance sheet GL). When I run the consolidation process for the next month, the closing balance of foreign subsidiary balance sheet GLs are convert at the closing rate of February month and the elimination entry which I had passed during the January moth will not be revalued (converted) at the closing rate of February month. This will create an inaccurate balance of relevant GL accounts of consolidation company for February month.
Any solution for this issue???
Reporting Currency – USD
Foreign subsidiary currency - EUR
GL – Trade Receivable
January
IF USD 1 is = 0.5 EUR
Receivable from ABC company (Parent company) - (EUR 2000 @ 0.5 at Jan 2022) = 4,000.00
Elimination Entry =(4,000.00)
February
IF USD 1 is = 0.25 EUR
Receivable from ABC company (Parent company)
(EUR 2000 from 0.5 to 0.25 at feb 2022) = 8,000.00
*** Elimination entry is not revalued although entry is passed in Euro or not
