Example: Consolidating for the first time with prior period activity
Related information
Related topics
All balances from retained earnings closing accounts (accounts that are set to close to retained earnings) from prior periods are transferred to the retained earnings opening balance entry in the consolidation reporting book.
About retained earnings: Consolidating after the first period with activity
A best practice is to consolidate from the first period during which your entities had business activity. This example deals with those edge cases where a consolidation must begin after the beginning of business activity, for instance when your company acquires a new business entity. In this example, there are opening balance entries in the entity because consolidation is starting after the beginning of business activity.
In this example, business activity began in December 2023 and consolidation begins in January 2024. We can use trial balance reports to observe accrual data, opening balance, and activity as compared to consolidation data. We can then run trial balance reports on subsequent periods and drill down to the entries to observe separate opening balance and retained earnings entries.
Trial balance report on accrual data for first period
This trial balance report on the accrual data for the first consolidated period shows opening balance and retained earnings entries. In this example, we run a trial balance report on the accrual reporting book for entity E100. The reporting period is set to the current month and as of date is January 2024.
The details of the trial balance report are summarized as follows:
- Report name: Trial balance report
- Reporting book: Accrual
- Reporting period: Current month
- As of date: 31 January 2024
- Location: Entity E100
The trial balance report is shown here:
| Account number | Account name | Opening balance on 1 Jan 2024 CAD | Debit CAD | Credit CAD | Closing balance on 31 Jan 2024 CAD |
| 1000 | Bank account | 65,000.00 | 55,000.00 | 0.00 | 120,000.00 |
| 1200 | Accounts Receivable | 40,000.00 | 100,000.00 | 0.00 | 140,000.00 |
| 2000 | Accounts Payable | -25,000.00 | 0.00 | 27,000.00 | -52,000.00 |
| 3500 | Retained earnings | -80,000.00 | 0.00 | 0.00 | -80,000.00 |
| 4000 | Sales | 0.00 | 0.00 | 155,000.00 | -155,000.00 |
| 5000 | Cost of Goods Sold | 0.00 | 27,000.00 | 0.00 | 27,000.00 |
| Totals | 0.00 | 182,000.00 | 182,000.00 | 0.00 |
The trial balance report on the accrual data for the first period of activity shows:
- Opening balances are included when consolidating the data from this period because this trial balance report shows that this is not the first period with business activity. The opening balances after consolidation are equal to the opening balance entries shown in the report.
- A retained earnings entry of -80,000 as calculated from the previous period close into the account. Intacct calculates the retained earnings entry by subtracting the cost of goods sold from sales revenue.
Trial balance report on first consolidated period
This trial balance report shows the consolidated first period with activity. In this example, we run a trial balance report on the Consolidation reporting book for entity E100. The reporting period is set to the current month and as of date is January 2024.
The details of the trial balance report are summarized as follows:
- Report name: Trial balance report
- Reporting book: Consolidation book
- Reporting period: Current month
- As of date: 31 January 2024
- Location: Entity E100
| Account number | Account name | Opening balance on 1 Jan 2024 CAD | Debit CAD | Credit CAD | Closing balance on 31 Jan 2024 CAD |
| 1000 | Bank account | 0.00 | 120,000.00 | 0.00 | 120,000.00 |
| 1200 | Accounts Receivable | 0.00 | 140,000.00 | 0.00 | 140,000.00 |
| 2000 | Accounts Payable | 0.00 | 0.00 | 52,000.00 | -52,000.00 |
| 3500 | Retained earnings | 0.00 | 25,000.00 | 105,000.00 | -80,000.00 |
| 4000 | Sales | 0.00 | 0.00 | 155,000.00 | -155,000.00 |
| 5000 | Cost of Goods Sold | 0.00 | 27,000.00 | 0.00 | 27,000.00 |
| Totals | 0.00 | 312,000.00 | 312,000.00 | 0.00 |
The trial balance report on the first consolidated period shows:
- Opening balance entries are included in the debits and credits columns because consolidation began in a period following existing business activity.
- Retained earnings include an Intacct-generated opening balance entry as this is not the first period with accrual activity. By observing the closing balance, we note the portion of retained earnings representing the opening balance entry. The current period portion is part of the close process.
Trial balance report on second consolidated period
This trial balance report shows the consolidated second period. In this example, we run a trial balance report on the Consolidation reporting book for entity E100. The reporting period is set to the current month and as of date is February 2024.
The details of the trial balance report are summarized as follows:
- Report name: Trial balance report
- Reporting book: Consolidation book
- Reporting period: Current month
- As of date: 28 February 2024
- Location: Entity E100
| Account number | Account name | Opening balance on 1 Feb 2024 CAD | Debit CAD | Credit CAD | Closing balance on 28 Feb 2024 CAD |
| 1000 | Bank account | 120,000.00 | 0.00 | 0.00 | 120,000.00 |
| 1200 | Accounts Receivable | 140,000.00 | 0.00 | 0.00 | 140,000.00 |
| 2000 | Accounts Payable | -52,000.00 | 0.00 | 0.00 | -52,000.00 |
| 3500 | Retained earnings | -208,000.00 | 0.00 | 0.00 | -208,000.00 |
| Totals | 0.00 | 0.00 | 0.00 | 0.00 |
The trial balance report on the second consolidated period shows:
- The opening balance entries are the same as the closing balance entries because this period has no business activity.
- The retained earnings opening balance is -208,000. Intacct calculates the retained earnings from the previous period close into accounts plus opening balance transactions generated in the first consolidated period (January 2024). Retained earnings are 80,000 from opening balance, plus a revenue of 155,000, minus 27,000 Cost of Goods with a total of -208,000 from January in retained earnings. This amount is carried over from the prior period.
Regional availability
Consolidation is generally available in the following regions:
All regions
