Elimination process in FCCS
The consolidation process in FCCS includes elimination of intercompany balances, which will occur when intercompany entities meet at the first common parent within the Entity hierarchy.
The elimination process use Entity, Intercompany, Account, Data Source, and Consolidation Dimensions. In addition, an intercompany “Balancing Account” or Plug Account must be created to support the elimination process.
Intercompany Dimension is the list of base Entities tagged as intercompany entities. In the Attribute Values of the Entity set up, the Entity is tagged as an Intercompany Entity. For example UK31 is a base entity tagged as an Intercompany Entity as follows:
As a result, UK31 is automatically created as a member of the Intercompany Dimension as follows:
Plug and Intercompany Accounts
Plug Accounts need to be created and assigned to Intercompany Accounts (See Intercompany Accounts section below). Plug Accounts must have the Attribute Values = Plug_Acc_Yes as shown below.
If there is an imbalance during the elimination process, both intercompany balances will be eliminated and the difference will be in the Plug Account. For example, Entity E1 sold 2 shipments to Entity E2. E1 has recorded both intercompany receivables but since E2 has not received the second shipment, it has not recorded the corresponding intercompany payable.
During the consolidation process, Interco Receivable and Interco Payable will be eliminated. The imbalance of 1,000 will be in IC_DIFF_PAY_REC, which is the assigned Plug Account for both Interco Receivable and Interco Payable.
- Plug Account balances can only be removed by correcting the imbalance between the eliminating entities. It is not possible to post journals to these accounts.
- If the loaded data did not have an assigned intercompany partner, it will not eliminate.
The Attribute Values for Intercompany Accounts must include IC_Acc_Yes. In addition, the appropriate Plug Account must be assigned as shown below:
Elimination at first common parent
Consider the sample Entity Hierarchy below.
The intercompany balances between E2 and E1 will be eliminated under Parent 2 while the intercompany balances between E5 and E1 will be eliminated under the Top Parent. Technically this elimination will occur between Parent 1 and Parent 2 since the common parent of E5 and E2 is the Top Parent.
Elimination is achieved by systematically populating the intersection of FCCS_Intercompany Eliminations member of the Data Source Dimension and FCCS_Elimination member of the Consolidation Dimension with the reversed sign of the amount to be eliminated.