General Inquiries

Cross Company Elimination

  • 1.  Cross Company Elimination

    Posted 01-17-2019 08:55
    Looking for help with consolidated balance sheet.  We began operating three companies this past fiscal year.  One parent company and two subsidiaries.  All intercompany transactions have been recorded throughout the course of business and at the end of the year we have asset and/or liability balances in all three companies as appropriate.

    I know to 'eliminate' these entries when preparing a consolidated balance sheet, but am looking for help with the mechanics of this using SAGE 300 CRE software.

    Do others leave the balances in the A/L accounts and close the fiscal year, just leaving this a 'report' issue?
    One suggestion from our consultant was to change our GL settings to allow postings through that do not proof to zero and make cross company entries to zero out each account.  Is this a normal practice?

    (I should also note that during the course of business cash moves between the companies relieving liabilities as required.)

    Any suggestions are appreciated.  Thanks!

    Lucrezia Esteban
    East Muskegon Roofing and Sheet Metal Co., Inc.
    Certified Sheet Metal LLC
    Certified Building Solutions LLC
    Muskegon MI
    (231) 744-2461

  • 2.  RE: Cross Company Elimination

    Posted 01-18-2019 08:11
    Lucrezia -

    If the intent is just a consolidated reporting issue, which is typically is, the normal solution is to set up a dummy company (prefix) that only houses the intercompany eliminations and then include that prefix in your reports.  That way your source companies stay as they are.

    As an example, you have companies A and B with intercompany transactions.  You set up a third company C, tp hold the elimination entries.  So on your financials, the columns are:

    1) Company A
    2) Company B
    3) Company A + Company B (Total Before Eliminations)
    4) Company C (Intercompany Entries)
    5) Consolidated Totals (A plus B minus C)

    I've also seen the same strategy used for book/tax differences.

    Michael Suhovecky
    Brier Hill Associates
    Dublin OH
    (614) 439-2352

  • 3.  RE: Cross Company Elimination

    Posted 01-18-2019 09:43
    Hello Lucrezia and Michael:

    Michael is spot on about using an eliminations prefix.

    Not knowing your specific installation of Sage 300 CRE (fna Timberline) please allow me to add a few comments.

    I am assuming that you only have one database.  This makes the intercompany accounting through the subsidiary modules (AP, AR, CM, JC, PR, ect.) much easier to manage.

    I am also assuming your GL structure is something like company-department-base.suffix.  This is the prefix A/B standard most consultants create in Timberline.  You might have only a prefix A or a prefix A/B/C standard, but that is not as common.

    First caution, make sure your subsidiary modules tie-out to the GL.

    Second caution, if you need to make corrections do them in the originating modules.  Top side adjustments in GL will haunt you for years.

    Following Michael's example of two companies (i.e. co 100 & Co 200), I typically used co 900 as my elimination company.  I also used a common base account for the intercompany (I like 1999, but you can use whatever floats your boat).  I differentiated the various intercompany accounts by using the suffix.  So the intercompany account in company 100 to 200 would be 100-00-1999.200; whereas the intercompany account in company 200 to 100 would be 200-00-1999.100.

    Using the above logic, when I wanted to record my eliminations in company 900 I would do the following:
              If the balance in account 100-00-1999.200 is a DR, the entry would be an offsetting credit to account 900-00-1999.200
              If the balance in account 200-00-1999.100 is a CR, the entry would be an offsetting debit to account 900-00-1999.100

    Hope this helps in your new and wild adventure of intercompany accounting in Timberline - Melvin.

    Melvin Frost CPA/MBA
    Sr. Controller
    Mesa AZ
    (602) 385-1656

  • 4.  RE: Cross Company Elimination

    Posted 01-18-2019 11:17

    Hi Lucrezia,


    I have 3 companies that cross operate. 2 that rely heavily on each other daily. I would be happy to set something up to discuss how I do this when things slow down a bit maybe at the beginning of February, if that works for you?


    Tori Wagner – Accounting Manager

    (O) 480-237-0765
    1736 S. Nevada Way, Mesa AZ 85204



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  • 5.  RE: Cross Company Elimination

    Posted 01-18-2019 13:49
    We have four companies, one parent and three subsidiaries (2 construction and 1 equipment) and have an eliminations company in our system. P&L and B/S eliminations are done on a monthly basis. If you're doing your consolidations in Excel, you can just add a column for eliminations. I've done that at previous companies where the systems weren't as sophisticated as they are today. For any intercompany balances that are outside of A/P and A/R, we are "settling" them on a periodic basis (haven't decided if that will be quarterly or annual yet).

    Bonnie Smith
    MHA Resource Company
    Portland OR
    (503) 665-0165

  • 6.  RE: Cross Company Elimination

    Posted 01-21-2019 08:13
    Thank you everyone!  I appreciate the input....  I know what I have to do now :)

    Lucrezia Esteban
    East Muskegon Roofing and Sheet Metal Co., Inc.
    Muskegon MI
    (231) 744-2461