In the section Eliminating Intercompany Receivables and Payables states that payables and receivables can not be counted twice. The same holds true for inventory that is transferred between subsidiaries. When combining the financial statements of several companies, you must make sure that only real revenues and expenses are recognized and that intercompany revenues and expenses due to transactions between companies in the group are eliminated. For example, when inventory is transferred between subsidiaries at a price other than cost, a profit or loss occurs, which must be eliminated from a consolidated viewpoint. If inventory from these transfers remains on the books at period end, the profit or loss reported by the selling company must be eliminated.

1. Select in the SAP R/3 System screen Accounting ® Financial accounting ® Consolidation.
2. On the Consolidation screen, select Consolidation ® Elimination of IC profit/loss ® Inventory.
3. On the Elimination of Intercompany Profit/Loss screen, enter the following data:

Field	Europe	North Amerika
Subgroup	SWW	USN
Fiscal year	1995	1995
Period	12	12
Version	100	200
List type	1	1
Document type	31	31
Exchange rate indicator	1	1

4. Leave all other fields blank. Select Execute.

The elimination program reads data from the inventory supplying company and the inventory managing (holding) company. It then calculates the amount of intercompany profit or loss and creates documents to eliminate the profit or loss.

5. Execute this program again, with list type 3 instead, to view the documents that are proposed for posting.
6. Return to the main SAP R/3 System screen.