You can use this workflow to book intercompany elimination entries to your Parent company (i.e. consolidation company) if you have specific intercompany accounts in the COA (Chart-of-Accounts) of your Parent. 

This is an optional workflow, you can always book your elimination entries manually in the Parent company, like any other consolidation adjusting entries.



INITIAL SETUP - FIRST TIME USE

  • Elimination Division Selection- when you engage the workflow for the first time, you will need to select the division name in your parent company where the elimination journal entries should book to so those adjustments are segmented from your subsidiary financials (for example, it could be called x-Interco). 
    • If you have already created a division name value in your parent company, select this from the drop-down list - this selection will default going forward but can always be changed. 
    • If you have not yet created a division name value, you can select the 'Add New Division' option from the list and JustConsolidate will create the name in your QBO parent company
  • Once you have selected an Elimination Division, you will see a table display, if you haven't already, confirm you have selected the correct accounting period


  • Intercompany Account Selection- the next step is selecting the intercompany accounts that you need to book eliminations for - use the drop-downs in the table to select and list out each relevant account - these account selections will default going forward and are easily modified (delete or add new ones)
    • As you add intercompany accounts, balances will start to display in the table - the current balance in the account by division in the parent company and in the Elimination Journal Entry column you will see what the system calculates as the Debit or Credit entry needed to get the balance of the intercompany account to net to zero (more on this later)
    • Foreign Currency Sub Consolidation - if you have intercompany activity with a foreign currency subsidiary, it is likely that you will include your CTA (currency translation account) in the intercompany list of accounts. You will notice that the logic for the CTA account is different from your other intercompany accounts as the system is designed to treat your CTA account as a 'plug' account when formulating the balances for the Elimination Journal Entry - it is important you are take this into consideration as plugging the CTA so the Elimination Journal entry balances can mask an underlying out-of-balance in your subsidiary level accounting (more on this later)


HOW TO REVIEW AND POST ELIMINATION ENTRIES

  • After you have made your selections for fiscal period, elimination division and intercompany accounts, the system will extract from your parent company and display the current balance in each intercompany account - the balances are displayed by division/subco so you can clearly see the source of the balances
  • If the net balance in the account across all the divisions in the Parent is not zero, the system will calculate and display the required Debit or Credit entry needed to get the account balance to zero out for that period ending
  • If all the intercompany activity across the subco's was recorded properly (i.e. both sides of transaction booked), the proposed elimination journal entry across all intercompany accounts should balance so that total Debits equal total Credits and the <Post Journal Entry> button will illuminate green, click the Post Journal Entry button to post the elimination journal entry to the parent company
    • When the Journal entry posts, the system will re-extract balances from the parent and the current balance table will update, you should see the elimination division balances update with the posting and the elimination journal entry column will now be zero indicating no further entry required, all intercompany account balances in the parent are zero for the period selected
  • If intercompany activity is not recorded properly across all the subcos (ie. one side not recorded to match), the proposed elimination journal entry will not balance (total Debits not equal to total Credits). This highlights a need to correct the underlying intercompany accounting at the subco level
    • Manual entry for Elimination - If for some reason you want to leave the subco balances as they are, you can adjust the proposed elimination journal entry by simply clicking on the cell in the Debit/Credit column for that account and you can manually enter an amount (similar to Journal Entry form in QBO) to get the elimination entry to balance and post
  • Foreign Currency Sub Consolidation - as mentioned above, if you have a foreign currency subco, it is expected that you would add the CTA (the account you designated as your currency translation account) to the intercompany list of accounts. The workflow is designed to treat the CTA account differently in that the Debit or Credit entry displayed in the proposed Elimination Journal Entry is not the balance required to get the CTA account to zero balance but rather a plug value to get the elimination journal entry to balance as typically there is balance due to exchange rate differences over accounting periods that is required when booking intercompany eliminations - you need to carefully inspect the value that is plugged to CTA as it may mask an underlying interco accounting issue where one side was not booked properly - with CTA plugging the total it won't be obvious that you're out of balance due to an intercompany accounting mis-match


  • Re-Consolidation and Re-Post of Elimination Journal Entry - if you previously posted an Elimination Journal Entry to your Parent using this workflow and you need to re-post the elimination entry due to balance changes from reconsolidation of subco balances, when you click the Post Journal Entry button an alert message will display alerting you that the system detected an existing elimination journal entry, you will be presented with two options to choose from;
    • Delete Existing Elimination Entries - JustConsolidate will delete the existing elimination journal(s) detected for that period, the system will then re-calculate and display the intercompany account balances by division and re-calculate the required elimination journal entry for posting (this method appeals to users who don't want adjusting entries being booked, just one new elimination journal entry)
    • Post - JustConsolidate will post the elimination journal entry as an incremental or adjusting  journal entry alongside the existing one (this method appeals to users who prefer to keep all entries posted, original and subsequent adjusting entries)



OTHER THINGS TO KNOW ABOUT THIS WORKFLOW

  • When you are engaging this workflow, certain actions require JustConsolidate to pull data from your QBO parent company, for users who have a large number of divisions (i.e subco's being consolidate) you may notice a longer period of time elapse (10-20 seconds) while the app is pulling data and updating the display tables, this is normal
  • you can always force JustConsolidate to run a fresh pull of balances from the Parent by refreshing the browser window of JustConsolidate