Eliminating Intercompany Receivables and Payables 

When two companies within an organization have outstanding receivables and payables with each other, they must be eliminated. While each individual company must recognize the asset or liability, the assets and liabilities do not really exist on a consolidated basis. This section demonstrates how to eliminate the intercompany receivables and payables.

  1. Select in the SAP R/3 System screen Accounting ® Financial accounting ® Consolidation.
  2. On the Consolidation screen, select Consolidation ® Intercompany elimination.
  3. On the Intercompany Elimination screen, enter the following data:

    4. Field

    Europe

    North America

    Subgroup

    SWW

    USN

    Fiscal year

    1995

    1995

    Period

    12

    12

    Version

    100

    200

    List type

    1

    1

    List type 1 w/currency totals

    Select this

    Select this

    With standardizing entries

    Select this

    Select this

    With own document type entries

    Deselect this

    Deselect this

    Document type

    21

    21

  4. Select Execute.

    5. The first elimination report you see breaks down the eliminations between each company combination by transaction currency. This is very valuable for separating your differences between amounts due to timing and amounts due to exchange rate fluctuation.

    The first column lists the company and partners that are eliminated.

  5. Place cursor on company 3000 in the row that contains company 3000 and partner 4000, and then select Documents at the top of the screen.

    6. The report now changes to show you the elimination documents between company 3000.

  6. Select Method to view the rules that were defined for this elimination and 4000. Notice that one document is created for each transaction currency.

    7. On this screen you see the elimination set. This contains the FS items that were compared during elimination.

  7. Position the cursor on the elimination set V401 and select Choose to see the accounts that were defined.
  8. Go back to the Display View "Intercompany Elimination": Details screen. The FS items that are used as elimination difference items due to currency or other difference items are defined here.
  9. To see more examples, go back to the Intercompany Elimination screen to execute this program again, but with document type 22 or 23. If you use the data of North America you also can enter the document type 24 or 25. The document types show the following different business scenarios:

    10. · Document type 22: Sales/Cost of sales elimination. One-sided elimination, where elimination documents are created by additional field.

    · Document type 23: Investment income elimination. Similar to document type 21, but without a currency split.

    · Document type 24: Intercompany dividend income. Example of a one-sided elimination.

    · Document type 25: Intercompany dividends payable. Example of a one-sided elimination, with the offset posting being made on the triggering company’s books.

  10. To execute the elimination program for a specific company/trading partner combination within a subgroup, enter these two companies in the parameters screen before executing the program:

    11. a) Go to the Intercompany Elimination screen.

    b) Enter the two companies in the fields provided for the first and second company of a pair of companies.

    c) Select Execute.

    If you want to see only the differences that exceed a certain amount in the program output, you can enter this amount in the Tolerance field on the Intercompany Elimination screen before executing the program. All eliminations will be posted, but only differences that exceed this amount will be shown in the output. This is useful if you have a large organization with many intercompany transactions to eliminate.

  11. Return to the main SAP R/3 System screen.