Consolidating financial statements eliminating entries
Often, business leaders look only at their individual statements to go about their business.
At the end of the day, consolidation is really about addition – adding in balancing entries. Here are some of the complexities we see regularly: 1.
Let’s also assume that the manufacturer charges the retail division the same price it charges outside customers.
The retailer then charges its customer .00 per widget for a total of 00.
In this post, we’ll cover the basics of consolidation, some of the challenges that emerge and possible solutions.
Often, when people “upgrade” from Excel to a real system, they discover that what they thought was working, wasn’t. Setting Up Intercompany Costs In our example, widgets were sold at the same price to outside wholesalers and the company-owned retailer. There are all kinds of reasons management may want different intercompany prices.
Some we’ve heard include: If you’re operating within one country, you have a fair amount of leverage (with some restrictions – talk to your tax guys) on allocating your profit.
Scaling Up to Multiple Systems On purpose, we’ve used a simplified example.
In reality, it’s rare to have such a simple situation.