NetSuite Blog

Are you tired of manually creating, tracking, and eliminating intercompany transactions?

NetSuite's Automated Intercompany Management feature identifies transaction lines and generates elimination journal entries seamlessly. Learn the benefits of this helpful feature and the quick steps to reduce manual efforts to manage and report activity. ​

Intercompany

The system identifies transaction lines that require elimination:​

• Journal Entry​
• Sales Order (invoice)​
• Purchase Order (billed)​

Enabling the Automated Intercompany Management feature adds the following:​

• Cumulative Translation Adjustment-Elimination (CTA-E) account is added to your chart of accounts.
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• Eliminate Intercompany Transactions is added as the last task in the Period Close Checklist.
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• Eliminate box displays for journal lines on standard and advanced intercompany journal entries.
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• Represents Subsidiary field is added to Customer and Vendor records.
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• Intercompany Status and Paired Intercompany Transactions fields are added to Sales Order, Purchase Order, Return Authorization, and Vendor Return Authorization forms.
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• Eliminate Intercompany Transactions box is added to the Account form.
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Elimination Journal Entries – Overview:​

Many different business transactions between a parent company and its subsidiary involve a profit or loss.  Consolidated financial statements compute the financial position and the results of the two operations of two or more subsidiaries as if they were one company, so the unrealized profits or losses in these intercompany transactions need to be eliminated.  
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General Ledger accounts that will require elimination entries must also be available to the appropriate elimination subsidiaries.
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Elimination Journal Entries are regular journal entries, except they’re associated with the elimination subsidiary.​

• In Essence, you are netting out the income and expenses between subsidiaries.​

• These elimination Journal Entries can be memorized, imported, reversed, and deferred just like any other JE.​

• Reporting (Configure as needed and for your processes)

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Automated vs Manual Elimination Journal Entries:​

MANUAL:

This might be appropriate for organizations that have a very rare occurrence of trading between subsidiaries​

• You have to manually track which entries need elimination and how much needs to be eliminated​

• Elimination journal entries are posted, manually, as often as required​

• NetSuite does not perform a validation of entries

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AUTOMATIC ELIMINATION​: ​

• The Automated Intercompany Management feature manages intercompany transactions and generates elimination journal entries automatically
  
  
• Reducing:​
  - Need to manually create, track, and eliminate intercompany transactions​
  - Manual steps required to manage and report intercompany activity.
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• NetSuite generates the elimination journal entries based on the intercompany transaction lines and intercompany journal lines marked to be eliminated.
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  - As part of the period close, NetSuite evaluates the activity in intercompany accounts and creates the journal entries to eliminate artificial profit and loss amounts.

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Written by Travis Perkins, Senior Business Consultant