Page 1 of 1
Elimination entries
Posted: Mon Sep 08, 2008 11:54 am
by Shashi_k
Hi,
what is elimination in regard to Consolidation, Why we need eliminate any entries at the time of consolidation can any one please explain with some live scenario.
Regards,
Shashi.
Posted: Wed Sep 10, 2008 5:16 pm
by garyg
Very simple. Imagine you have company A and company B in chart of accounts. When you consolidate both companies A & B, you do not want to inflate the numbers.
Example A sold 1 Million to B. This means B Purchased 1 Million from A.
When you consolidate we should not see any sale or purchase. Otherwise the consolidated results show 1 Million as Purchases, 1 Million as Sales, but in fact it is not a sale or purchase for consolidated company.
Posted: Tue Sep 16, 2008 4:37 am
by Shashi_k
Thanks Gary
Posted: Thu Sep 18, 2008 2:44 am
by abhgaur@gmail.com
Through Elimination entries you eliminate
a) Intercompany a/c balances
b) Intracompany a/c balances
c) Investment Equity (incase if ur subsidary is not 100%)