Elimination entities — Global Consolidation

The workflow for setting up a book using Global Consolidation is shown here:

Global Consolidation book setup
❶ Set up book info	❷ Select entities to consolidate	❸ Review and add journals	❹ Select accounts to override	❺ Add IET auto-elimination

Elimination entities are shell entities that are used only for posting consolidation entries for a consolidation book.

• The elimination entity is where Consolidation posts consolidation entries. These include: elimination transactions for inter-entity activity, currency translation adjustments, and non-controlling interest entries.
• If you have consolidation books in different currencies, the elimination entity currency must match the reporting book currency.
• If you're using Advanced Ownership Consolidation, a best practice is to create a unique elimination entity for each reporting book in the ownership structure.

Enable access to entities

Each consolidation book requires an elimination entity to record inter-entity elimination activity. This enables the regional folks who manage their own consolidation books to access to their respective elimination entity.

If a user has permissions to access the elimination entity and related consolidation entities, the user can run consolidations for that consolidation book without depending on the top-level user.

Entity permissions are set by the top-level admin from the Company > Users menu. The User entities tab lists the entities to which a user is restricted. If the list of entities is empty, the user can access all entities in the company, including elimination entities. If the list shows one or more entities, that means the user is restricted to those entities in the list.

1. In the Company > Users menu, locate the user and select Edit.
2. On the User information page, select User entities.
3. Ensure the user can access all the entities in the consolidation book, including the elimination entities.

   Typically, users can access all entities by default.

Create an elimination entity

All consolidation books must have an elimination entity. You need one elimination entity for every currency used in your consolidation books. For example, if you have 3 consolidation books that all use the same currency, you only need 1 elimination entity for those 3 books.

1. Go to Company > Setup > Configuration and select Add (circle) next to Entities.

2. Create a new entity.
3. Give the entity an ID and Name that identifies it as an elimination entity.
4. Select the Enable as the elimination entity option.

Select the elimination account in your book setup

When setting up a consolidation book, you need to select the elimination account.

1. Create or edit a consolidation book.
2. Select the Entities to consolidate tab.
3. Select the entities you want to consolidate from the list provided.
4. Select Inter-entity auto-elimination.
5. Select an elimination entity from the Elimination entity dropdown menu.
   • The Elimination entity dropdown menu appears only when you’re creating or editing a book.
   • If you're viewing the setup of an existing book, the elimination entity is displayed in the list of entities included in the book.

Next step: Entities to consolidate—Global Consolidation

About the posting of elimination adjustment entries

When consolidating a book, whether global or domestic, Intacct posts IET elimination adjustment entries to the elimination adjustment account.

• Global Consolidation: Select an elimination adjustment account to automatically record CTA and elimination variances and bring to zero the account balances of automatically eliminated accounts.
• Domestic Consolidation: Select an elimination adjustment account to automatically record elimination variances and bring to zero the account balances of automatically eliminated accounts.

When you select an elimination adjustment account in an existing book, Intacct automatically posts elimination variances to the new elimination adjustment account. When consolidating a new book, you can select a different elimination adjustment account after creating the book.

You can select a separate elimination adjustment account for each book, whether it's a Global Consolidation or Domestic Consolidation book.

You can find the Elimination adjustment account drop-down list on the Entities to consolidate tab of any book, when you select Inter-entity auto-elimination.

The elimination adjustment GL account is set up as:

• Included in the equity accounts on your chart of accounts
• Balance sheet account
• Credit normal
• Non-closing

More about IET eliminations and currency changes in Global Consolidation

Global Consolidation uses the CTA adjustment to record the currency fluctuation for the inter-entity transaction (IET) balances across entities with different base currencies.

IET eliminations are recorded in the elimination entity only. Often the debit and credit won’t match due to differences of the base currencies among the two entities. But the elimination must balance, so a CTA account is used to equalize the debit and credit.

For example, suppose that:

• a US entity has an inter-entity receivable of $500,000 USD
• the associated UK entity has an invoice inter-entity payable of GBP 520,000 ($500,000 USD)

When eliminating the two, they don’t match because the exchange rate has changed. In this case, let's say there's a $20,000 difference. Because the difference isn't a direct business transaction, the difference goes to the CTA account of the elimination entity.