US Eliminations Rule

When reporting the financial results of a group of entities, you may want to see the results for the group net all intercompany activity within the group. Therefore, the system identifies intercompany activities, and balances and posts entries so these activities and balances are fully eliminated when looking at the overall results for the group.

US eliminations functionality addresses the posting of intercompany eliminations in scenarios where a full legal consolidation is not required. When utilizing a consolidation model that is shared by the US Eliminations rule and the Eliminations and Adjustments rule - which is generally called matrix consolidation - a different set of Entity and Interco dimensions needs to be maintained for the US Eliminations rule. Therefore, two new types of dimensions are available for US Eliminations: Entity for matrix (P type) and Intercompany for matrix (Q type).

Except in the case of matrix consolidation, US eliminations normally use consolidation models different from the models used by legal consolidation.

Intercompany elimination entries should be reflected only in groups in which both the entity and the partner entity are part of the group. To address this, US eliminations uses a concept known as posting at first common parent.

The US eliminations business rules define the audit members to eliminate. For each of these audit members you then define the corresponding destination audit member under which the system should post the elimination postings.

The values entered in the following properties determine default elimination logic:

The default elimination logic does the following:

• Scans all base level non-elimination entities, specifically entities having the property ELIM <> Y.

• When the model has a currency dimension, the default elimination logic restricts its action to all reporting currencies only, which are currencies having the property REPORTING=Y. Data in local currency cannot be eliminated because it is in different currencies.

• Eliminates all values of the accounts to be eliminated, specifically accounts having the property ELIMACC<>blank, into the desired plug account, which is the account specified by the ELIMACC property itself.

• The elimination is posted to the elimination entity immediately below the first common parent. The common parent is derived as follows:

  • For a particular record the system identifies the two entities for which a common parent must be found. The first entity is the current entity member and the second entity is the entity corresponding to the current intercompany member. This entity is obtained by reading the content of the property ENTITY of the current intercompany member.

  • The system searches in a selected entity hierarchy for the first member that has both entities as descendants. This is the common parent.

  • Then the system searches the immediate descendants of the common parent for a valid elimination entity, which is an entity having the property ELIM=Y. This is the entity where the results of the elimination are stored.

  The default elimination logic does its searches in the first organizational structure of the entity dimension. This can be modified so that the system performs the elimination in all hierarchies that exist in the entity dimension. If no common parent is found, no elimination occurs. If no elimination entity is found below the first common parent, the next common parent is searched.