---
title: "Elimination of Intercompany Income and Expense"
description: "Using the app for elimination of intercompany income and expense, the income and expenses that are the result of business transactions between companies in a given consolidation area are eliminated for consolidated financial statements."
source_url: https://support.lucanet.cloud/en/documentation/consolidation-financial-planning/consolidation/consolidation-2/configuring-consolidation-apps/elimination-income-and-expense
language: en
last_updated: 2023-08-16
---
# Creating and Configuring the Elimination of Intercompany Income and Expense

## Overview

Using the **app for elimination of intercompany income and expense**, the income and expenses that are the result of business transactions between companies in a given consolidation area are eliminated for consolidated financial statements.

In addition, it is possible to generate a **report on differences** that may arise when executing the app. The report displays the difference amounts with the corresponding difference accounts for each intercompany relationship.

When configuring the app, you can choose from the following options:

- **Elimination of intercompany income and expense over all selected accounts**\
\
With this option, the app will eliminate intercompany transactions between any pair of two consolidation units across all chosen accounts based on the given partner information. Any difference from elimination will be recognized on the second consolidation unit
- **Elimination of intercompany income and expense as elimination between seller and buyer**\
\
With this option, the app will eliminate intercompany transactions posted to seller accounts with the intercompany transactions posted to the respective buyer accounts based on given partner information. Any difference from elimination will be recognized on the buyer side of the intercompany transaction.

{% info-box %}
IC transactions between two consolidation units that are both posted to the seller accounts (both to the buyer accounts) are not consolidated, but cleared against the difference account. This option can also be used to present a one-sided elimination.
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## Configuring the Elimination of Intercompany Income and Expense

To configure the app for **elimination of intercompany income and expense**, click the app in the structure view and click **Edit** in the displayed dialog.

Configure the steps as described below.

### Settings

In the **Settings** step, specify the time and the relevant consolidation areas and/or units for consolidation:

Step 'Settings'

#### Create postings

Time of consolidation

**Per month**

The app eliminates the intercompany transactions in each month of the consolidation period and creates monthly consolidation postings.

**Accumulated at the end of the period**

The app eliminates the intercompany transactions accumulated in the last month of the consolidation period and creates a consolidation posting only in the last month of the consolidation period.

{% info-box %}
For each consolidation unit that is deconsolidated during the consolidation period, an accumulated consolidation posting is carried out in the last month of inclusion in the consolidation area.
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#### Consolidation area and/or consolidation unit

Consolidation groups and/or units of the selected group for which the consolidation is to be performed

**By default**, **all** consolidation areas and units within the group are included in the consolidation.

If you only want to include certain consolidation groups and units in the consolidation, activate the **Individual selection** check box and select one of the following options:

- **Individual**\
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In the table, select individual consolidation areas and/or consolidation units to be considered in the consolidation.
- **Exclude**\
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In the table, select the consolidation areas and/or consolidation units that are to be excluded from consolidation.

{% info-box %}
If you choose **Individual** or **Exclude**, the app will perform no eliminations for intercompany transactions of the excluded consolidation units.
{% /info-box %}

### Adjustment levels

In the **Adjustment levels** step, sepcify the adjustment levels for consolidation.

Step 'Adjustment levels'

#### Basis

Adjustment level group containing all adjustment levels for **data imports** and **adjustment postings** which need to be considered during consolidation.

Please ensure that this adjustment level group contains the adjustment level for [proportioning](https://support.lucanet.cloud/en/documentation/consolidation-financial-planning/consolidation/consolidation-2/data-transfer-and-proportioning.md).

#### Target

Adjustment level for consolidation postings to be used for the postings.

### Elimination

In the **Consolidation** step, specify the **procedure** for the elimination of intercompany income and expense as well as the required **accounts** and the **transaction type**.

'Elimination’ step

#### Account or items with intercompany transactions

Accounts for elimination of intercompany income and expense: Choose one of the following options:

**Elimination over all selected accounts** With this option, the app will eliminate intercompany transactions between any pair of two consolidation units across all chosen accounts based on the given partner information. Any difference from elimination will be recognized on the second consolidation unit

For this option, select all **accounts and/or items** to be considered for the consolidation.

**Elimination between seller and buyer**

With this option, the app will eliminate intercompany transactions posted to seller accounts with the intercompany transactions posted to the respective buyer accounts based on given partner information. Any difference from elimination will be recognized on the buyer side of the intercompany transaction.

With this option, assign all **accounts and/or items** that are to be included in the consolidation to either the **seller** or the **buyer** by selecting the accounts and/or items in the corresponding area.

#### Post differences

**Default values**

**Account** and **transaction type** that are to be used by default for postings of differences that arise during consolidation.

The account itself must **not contain** any intercompany transactions to be consolidated.

**Deviating values**

If you want to define different accounts or transaction types for certain intercompany relationships, activate the option **Advanced settings**.

After that, in the **Intercompany relationship** column, select the two related companies for which you want to define different values and configure a deviating **account** and/or a deviating **transaction type**.

Advanced settings

### Report

In the **Reports** step, you can specify the consolidation area(s) and period for which a report on differences should be generated if any arise when executing the app.

The report displays the **difference amounts** with the corresponding **difference accounts** for each intercompany relationship.

‘Report’ step

#### Generate report

Activate the option to create a report on the difference amounts when executing the app.

#### Included consolidation areas

Consolidation areas for which the report should be generated

{% info-box %}
The report can only be created for consolidation areas that were included in the **Settings** step for the app execution.
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#### Reporting period

Period for the report

**Year to date (based on fiscal year of consolidation area)** The report is created from the start of the financial year for which the consolidated financial statements are created.

**Consolidated financial statements**

The report is generated for the period of the current consolidated financial statements.

{% info-box %}
The report is created in an executable folder named **Reports for _name of the consolidated financial statements element_** when executing the app and is linked in the detail view of the **Consolidated financial statements** workspace in the **Report** column.

Each created report can be exported in Excel format.

Linked reports in the consolidated financial statements overview
{% /info-box %}

{% idea-box %}
- As long as a step has not been fully configured and/or configuration errors exist, it is displayed with a red exclamation mark .
- Once a step is configured completely and without any errors, it is displayed with a green check mark .
- You can close the configuration dialog by clicking the arrow icon at the top left.
- To change the name of the app, select the app in the tree view and choose **Properties** from the context menu.
{% /idea-box %}

## Executing the Elimination of Intercompany Income and Expense

You can execute the app for elimination of intercompany income and expense either **separately**, together with other apps in an **executable folder** or as part of **consolidated financial statements**.

How to proceed in each case is described under [Execute consolidation](https://support.lucanet.cloud/en/documentation/consolidation-financial-planning/consolidation/consolidation-2/executing-consolidation.md).

## Displaying and Deleting Created Elements

On the **Created elements** tab, the difference reports and postings that were created during the app execution are shown.

The table provides the following information:

- **Type** of the element
- **Path** under which the element was created When you click on the link, you are taken directly to the posting in the relevant [journal](https://support.lucanet.cloud/en/documentation/consolidation-financial-planning/imports-journals/journale.md) or to the report.
- Date of the **last execution** that created the element

Tab 'Created elements'

If necessary, you can **delete all elements**.

**Note**: Once all elements have been deleted, the state of the wizard is **Not executed** again.

## Displaying the App Properties

The **App properties** are displayed on the tab of the same name:

'Properties' tab

The following **App properties** are displayed:

- **Type** of the element
- Function of the **App**
- **Version** of the element.

**New available version**

As soon as a new version of the app is available that contains changes to the app configuration and/or the calculation logic of the app, the **Refresh** command is displayed, allowing you to update the app to the latest version.

Information about the changes to each version can be found in the **Release Notes**, which can be accessed via the link of the same name.

{% warning-box %}
We {% u %}strongly recommend{% /u %} to update all apps to the new version as soon as possible because it cannot be guaranteed how long an app with an obsolete version can be executed.
{% /warning-box %}