When running a consolidation in the FI-LC System for the first time, it may be necessary to divide the absolute amount of intercompany profits to be eliminated into a previous period proportion and a current period proportion. The previous period proportion may then be posted without affecting net income against the profit carry-forward item, while the proportion relating to the current period is entered in the income statement, thus affecting net income.
If intercompany profit/loss is generally eliminated without affecting net income, it is not necessary to sub-divide the absolute amount in the case of a first consolidation.

You need to define a separate document type to post the amount relating to the previous period. You have to set the parameters of this document type in such a way that deferred taxes are not automatically posted. If deferred taxes were automatically posted, this would result in a tax calculation which influences the results for the period. But the aim of the separate document type is to eliminate the proportion relating to the previous period without affecting net income. The resulting necessary calculation of deferred taxes is carried out in the system without affecting net income by means of selected items with the key BIL.

So, in order to deal with the proportion of intercompany profit/loss in inventory relating to the previous period, you have to:

• maintain a separate document type

• enter the offsetting items relating to the inventory positions, generally the profit/loss carry-forward item

• create the items for the calculation of deferred taxes as selected items with the key BIL