The document type that is relevant for the elimination procedure is part of the elimination rule. A document type can be assigned to more than one elimination rule. You enter the document type in the request screen for intercompany elimination. The document type controls which elimination rules are included in the elimination. You can, therefore, use the document type in order to execute elimination of intercompany payables and receivables separately from elimination of expense and revenue.

You can also make additional restrictions for the items that are specified in the elimination set. You can use a transaction type set to limit them to individual transaction types. In the case where one of the items in the elimination set does not contain a breakdown according to transaction types, the system ignores the limitation and the full value of the item is included in the elimination.

The elimination rules can be different for each fiscal year. The field Year is interpreted as "from year", so that additional entries are only necessary when there are actual differences.

In the detail screen of the intercompany elimination maintenance, items for the handling of elimination differences are allocated to the sets. They are separated according to the following causes:

• currency-related differences

• differences due to posting being made at different times, or due to other reasons.

You can enter one transaction type for each differential item. The posting is then made to this item using this transaction type. The breakdown according to transaction type has to be allowed for the corresponding item. If this breakdown is not allowed, the program terminates with an error message when you perform the intercompany elimination.

In addition, you also have to maintain global parameters. The differential items have to be specified per elimination set. The specification of the global parameters are made per document type. When carrying out the elimination, the system first accesses the global parameters of the first group. If the parameters in the individual elimination sets of a document type are not all the same, you receive a warning message.

The global parameters are explained below:

You have to select the Currency split indicator if you want to separate the elimination differences caused by currency translation from those caused by other factors. You also have to enter the exchange rate indicator, which should serve as a reference exchange rate indicator for the separation of elimination differences. Generally, this is the exchange rate at the reporting date.
It only makes sense to split the differences if you made the entries using the transaction currency. Then all posting will be carried out simultaneously in transaction and group currency.

If differences resulting from elimination are distributed among subsequent periods, problems arise in the following cases:

• Exchange rate change:

• At the end of the year, the balance forward program carries forward data you have entered and consolidation entries you have made into the new fiscal year. However, the exchange rate is different in the new fiscal year. The IC eliminations are carried out for the new fiscal year.
• Consolidation is performed during the year, say, at quarterly or monthly intervals, and the exchange rate changes from one period to the next.
• Following IC elimination, the exchange rate changes within the same period. IC elimination is carried out again.

• IC elimination is first run without differentiating between translation-related and other elimination differences. If, in the following year, you do decide to split the differences the following applies: The system performs the difference split for the previous year in the current year. If the elimination differences are stated on the income statement, the net income for the present year will be influenced by transactions that are causally applicable to the previous year.

• The related values must be re-entered in transaction currency in period 01 of the current year.
• IC elimination is repeated in period 01 using the exchange rate of the previous year.
• The parameters for the differences must be modified so that the differences, which would have been stated on the income statement of the previous year, are posted against the unappropriated retained earnings.

Select the One-sided elimination indicator if you want to perform elimination on the basis of only one company. This simplification can be useful for the elimination of expense and revenue.

You can only select this indicator when using one-sided elimination. In this case, the offsetting entry is also posted against the company that initiated the posting. This might be necessary for companies that prepare income statements according to cost of sales accounting.

When you select the Doc.per TType indicator, the elimination documents are created per transaction type.

When you use this option, the differential item is also posted and displayed with the same transaction type, as long as a breakdown by transaction type is allowed for this item.

Three, user-definable additional fields are available to you in the consolidation database. For example, you could differentiate according to region, division, and so on, within the income statement. If the document type you are using allows for posting to additional fields, these will be transferred to the documents during the intercompany elimination. In addition to this, when you make an entry in the Document per...field, the system creates elimination documents for each additional field and determines the differences. The differential items also receive the same additional account assignments, which are common per document.