US Eliminations Rule

The following are required to perform Intercompany eliminations within a model:

• The model must include a dimension of type I, Intercompany.

• The Intercompany dimension must include the property ENTITY, whose values are entity names.

• The account dimension must include the property ELIMACC, whose values are account names.

• The entity dimension must include the property ELIM, whose values are Y or blank.

• The appropriate business rule table must be set up.

• A Data Manager package executing the Intercompany logic must be available. This configuration not only allows Intercompany details to be entered for any account, but it also supports an automatic elimination-by-level for all desired accounts.

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 model is not required, such as within a standard financial model. When utilizing a legal consolidation model, Intercompany eliminations are normally handled as part of an eliminations and adjustments function.

However, in some cases you might want to leverage the same legal consolidation model to carry out activities for both US eliminations as well as eliminiations and adjustments , which is generally called Matrix Consolidation. In this model, you can maintain different sets of Entity and Interco dimensions respectively for US eliminations and elimination and adjustments. Then, if you enable the IMG parameter ENABLE_MATRIX_US_ELIM and set its value to X for this model using Tcode SPRO, you can specify Entity and Interco (Trading Partner) dimensions when setting the US Eliminination rule later.

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.

Excepect in the case of matrix consolidation, US eliminations are generally used in financial models as opposed to legal consolidation models.

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 (entities having the property ELIM <> Y).

• In case the model has a currency dimension, restricts its action to all reporting currencies only (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 (accounts having property ELIMACC<>blank) into the desired plug account (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 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 in the immediate descendants of the common parent for a valid elimination entity (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 (hierarchy) of the entity dimension. This can be modified to have the elimination performed in all hierarchies existing 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.

For the execution of the US Elimination rule, refer to:

US Eliminations as Script Logic

Execute Consolidation Task