I have a question on Consolidation and Elimination Entries. My question is how does the Application recognise the intra-Company transactions that need to be eliminated (if the process needs to be automated).
An example would probably make my questions clear :
Assume we have a 3 segment Accounting Structure - Company.NaturalAccount.Intercompany(IC)
Assume we have the transaction with journal entry as follows:
01. Expense.00 Dr £500 (Original Journal Line)
01. Intercompany Pay/Receive.02 Cr £500 ( Application Generated)
02.Intercompany Pay/Receive.01 Dr £500 ( Application Generated )
02. Revenue.00 £500 (Original Journal Line)
Now the application generated journal lines can easily be identified through IC segment. But how will the other two Journal lines - which are over stating the Legal Entity’s Expense and Revenue be Eliminated?
And what are necessary setups to be completed in order to run elimination progrm successfully?
Kindly assist here, thanks in advance.