Company consolidating entry inter
So, we have to make journal entries to “eliminate” the intercompany entries while preserving the original statements for the manufacturing and retail group.Elimination simply means backing out all intercompany activity transactions.A few additional things to note: We recommend keeping separate accounts for intercompany and external company transactions. Too often, intercompany and external transactions are mixed together, either because systems are inadequate or not set up appropriately. And in many companies, even mid-size ones, no one pays much attention to them.Often, outside accountants create the consolidated financial statement and only the CFO Controller and/or the bank looks at it.Let’s also assume that the manufacturer charges the retail division the same price it charges outside customers.The retailer then charges its customer .00 per widget for a total of 00.
All published data including history is stored in CFOUR and can be recalled at any time.
In the outside world, the only revenue that counts is revenue coming from a real customer.
That’s what consolidation is all about – putting together financial statements that eliminate all the internal back and forth and focus only on “real” customer revenue.
Scaling Up to Multiple Systems On purpose, we’ve used a simplified example.
In reality, it’s rare to have such a simple situation.