Intercompany elimination is the process of removing transactions and balances between entities in the same group when preparing consolidated financial statements, so the group does not count business it did with itself.
When a group reports as a single economic entity, dealings between the entities inside that group are not real income or expense at the group level. If one subsidiary sells to another, the group has not earned anything; it has moved goods from one pocket to another. Consolidating without removing these transactions would overstate group revenue, costs, assets, and liabilities. Elimination strips them out, so the consolidated statements show only the group's dealings with the outside world.
Trading between group entities, removed from group revenue and cost.
The loan balances and the interest charged between entities.
Costs one entity charges another for shared services.
Dividends paid from one group entity to another.
The matching balances each entity holds against the other.
Profit booked on a sale to another group entity, on stock the group still holds.
A group cannot count a sale it makes to itself. Here is what that means on consolidation.
If Entity B has not yet sold the goods on, you also eliminate the profit Entity A booked, because the group cannot recognise profit on stock it still holds. That profit is recognised later, when the group sells the goods to an outside customer.
Planir applies intercompany eliminations automatically, matching both sides of each transaction across entities from your live accounting data. The group view reconciles without the manual matching.
Planir is built for the planning and reporting cycles that funded, governed, and multi-entity businesses actually run.
Consolidated financials across every entity, every accounting system, and every currency, with intercompany eliminations applied for you.
See multi-entity consolidationThe financial foundation of every board pack, with variance analysis by dimension and forward projections your board can interrogate.
See board reportingThe financial section of every monthly and quarterly investor update, generated from your live data.
See investor reportingConnect your entities and Planir consolidates the group, eliminations included, so the numbers your board sees reconcile to source.