Examples of defining elimination logic and IC matching logics
Introduction¶
Some examples of setting up some commonly used elimination and IC matching logics are provided below.
Intercompany elimination of Costs/Revenues or Receivables/Payables
In this case, it must be set up as follows:
| Parameter | Settings |
|---|---|
| Attributes | |
| IC matching logic | Select to view the related IC entries in the matching cockpit. |
| Ctp elimination logic | Select to automatically generate an elimination journal for the relative IC entries. |
| Generate contra-entry | Do not select. |
| Generate balancing | Select. |
| Primary accounts only | Do not select if the accounts of two different sections (Costs/Revenues or Receivables/Payables) must be specified. |
| Single adjustment relationship | Do not select if you want to match and eliminate the cases of reciprocal relationships separately. |
| Intercompany Matching | |
| Absolute value Currency | Set to define a matching threshold. |
| Change sign on Dependent accounts | Do not select. |
| (Reconciliation account) threshold | Enter the amount above which the submission of the relationships on the cockpit is prevented. It can be 0. If the unbalanced amount BEFORE applying the reconciliation accounts exceeds the threshold, only the node’s consolidator can run the matching of the relationship. |
| Eliminations | |
| Proportional calculation method | Lesser % |
| Minorities calculation method | None |
| Equity evaluation method | Only set if there are consolidation scenarios with entities consolidated at equity, otherwise ignore. In the case of IC eliminations, select Eliminate. |
| Tax calculation method | None |
| Reverse type | If carry forward is enabled, the balance sheet IC declarations are guided by the normal accounts and P&L accounts are used to attribute the FX rate differences, select Set BS accounts to 0, write off P&L impact (IC). |
| Enable carry-forward | Do not enable on P&L IC declarations. Enable on balance sheet IC declarations guided by variations. On balance sheet IC declarations guided by normal accounts, only enable if P&L accounts are used to attribute FX rate differences. |
| Sum up generated journal | Select if you want the generated elimination to be summed up keeping the same dimensions, and for it therefore not to contain the details of the IC entries. |
| Balancing | |
| Debit/Credit account | Indicate the account to be used to generate the automatic balancing for unbalanced amounts below the threshold. |
Elimination of dividends
The distribution of a dividend can be considered a “unilateral” intercompany entry.
The owner entity registers an intercompany earning received from the owned entity. Only a reduction of reserves is registered on the owned entity due to the distribution of dividends. For example, entity A00 receives a dividend of € 100 from entity B00. In this case, B00 does not make any IC declaration. In order to eliminate this effect, CCH Tagetik behaves as follows:
- It generates an automatic contra-entry on entity B00.
- It eliminates the balanced IC declaration as a standard IC declaration.
In this case, it must be set up as follows:
| Parameter | Settings |
|---|---|
| Attributes | |
| IC matching logic | Leave unselected in order not to view the declared IC entries in the matching cockpit. |
| Ctp elimination logic | Select to automatically generate an elimination journal. |
| Generate contra-entry | Select to generate an automatic contra-entry to balance the elimination of the dividends. |
| Primary accounts only | Select because the IC declaration only concerns the dividends and not the contra-entry. |
| Eliminations | |
| Proportional calculation method | Entity 1 |
| Minorities calculation method | Entity 1 |
| Tax calculation method | None |
| Equity evaluation method | Only set if there are consolidation scenarios with entities consolidated at equity, otherwise ignore. For dividend eliminations, select Evaluate with equity method: single Entity journals |
| Enable carry-forward | Select. |
| Contra-entry | |
| Entity for contra-entry | Select the entity to which the contra-entry must be made out (Declaring or Contra-entry). In the case of dividends, select Declaring. |
| Debit/Credit account | Indicate the account to be used to generate the contra-entry. If the account can only be adjusted with variations, indicate the variation account. Otherwise, indicate a Normal account. |
Elimination of Revaluations/Devaluations
Revaluations and devaluations can also be eliminated from the ownership structure register.
The settings mirror those used for dividends, see Elimination of dividends.
Elimination of Financial investments (with financial investment value derived from Financial Statements)
The settings mirror those used for dividends, see Elimination of dividends. This is because the financial investment variations must be declared as normal intercompany entries.
Eliminate Financial investments (from Ownership structure register)
This example applies to all event types except for the revaluation and devaluation of financial investments.
It must be set up as follows:
| Parameter | Settings |
|---|---|
| Attributes | |
| Net equity elimination | Select. |
| Generate contra-entry | Do not select. |
| Generate balancing | Select. |
| Generate Entries by event | Do not select. |
| Eliminations | |
| Proportional calculation method | Entity 1 |
| Minorities calculation method | Entity 1 |
| Tax calculation method | None |
| Equity evaluation method | Only set if there are consolidation scenarios with entities consolidated at equity, otherwise ignore. |
| Reverse type | None |
| Enable carry-forward | Select. |
| Exclude Reclassifications and NER | Do not select. |
Revaluation/Devaluation of financial investments (from Ownership structure register)
In this case, it must be set up as follows:
| Parameter | Settings |
|---|---|
| Attributes | |
| Net equity elimination | Do not select. |
| Generate contra-entry | Select. |
| Generate balancing | Do not select. |
| Generate Entries by event | Do not select. |
| Eliminations | |
| Proportional calculation method | Entity 1 |
| Minorities calculation method | Entity 1 |
| Tax calculation method | None |
| Equity evaluation method | Only set if there are consolidation scenarios with entities consolidated at equity, otherwise ignore. |
| Reverse type | None |
| Enable carry-forward | Select. |
| Exclude Reclassifications and NER | Do not select. |
| Contra-entry | |
| Entity for contra-entry | Declaring |