Eliminating Intercompany Profit in Inventory

Before we run the task to eliminate intercompany profit in inventory, let's look at the inventory and markup data that needs to be imported into group reporting. In the following image:

• BE00 has inventory in the IPI GV Mer FS item.
• FS Item IPI_GV_Mer is statistical. It is used to store the inventory value for the elimination.
• The seller's (FR00) markup of 10% is contained in the IPI MR FS item.

The profit in inventory data shown in the image above was populated from a file. Some sample data from the source file is shown in the following code snippet:

• In line 1, the seller is FR00, the buyer is BE00, the IPI_Rate (profit %) is 10%, and the material is P680-110.
• In line 2, the statistical inventory value in IPI_GV_M IS 10,000.
• In line 3, the real inventory value in FS item131200 has a value of 10,000.

1: 2;Y1;Y1;U00;2021;12;FR00;IPI_Rate;;;BE00;A000;PRC;P680-110;10;;;;;;;;YCOA;
2: 2;Y1;Y1;U00;2021;12;BE00;IPI_GV_M;;;FR00;A000;;P680-110;;10000;;EUR;;;;;YCOA;
3: 2;Y1;Y1;U00;2021;12;BE00;131200;1;915;;A000;;P680-110;;10000;;EUR;;;;;YCOA;
4: 2;Y1;Y1;U00;2021;12;BE00;111100;1;915;;A000;;P680-110;;-10000;;EUR;;;;;YCOA;
5: 2;Y1;Y1;U00;2021;12;CA00;IPI_Rate;;;US00;A000;PRC;P680-110;20;;;;;;;;YCOA;
6: 2;Y1;Y1;U00;2021;12;US00;IPI_GV_M;;;CA00;A000;;P680-110;;10000;;USD;;;;;YCOA;
7: 2;Y1;Y1;U00;2021;12;US00;131200;1;915;;A000;;P680-110;;10000;;USD;;;;;YCOA;
8: 2;Y1;Y1;U00;2021;12;US00;111100;1;915;;A000;;P680-110;;-10000;;USD;;;;;YCOA;

When you run the profit in inventory elimination task (2015) in the Consolidation Monitor, the log is used to evaluate the postings:

• In sequence 010, BE00's inventory 131200 is reduced by -1.000 EUR with an offset to 412100. Since both a balance sheet and income statement item is posted, offsetting entries are booked to 317000 and 799000 via selected items.
• In sequence 020, the impact to BE00's net income from sequence 010 is reversed.
• In sequence 030, FR00's profit is eliminated.
• In sequence 030 only the trigger amount in IPI_GV_M is displayed in the log. However, the following postings (1.000 EUR each) are booked to the database:
  • Dr. 41200D Clearing account - Gross margin
  • Cr. 13100D Clearing account - Gross margin B/S
  • Dr. 317000 Current year retained earnings
  • Cr. 799000 Annual net income

The results can be confirmed in a report. The net income for the seller (FR00) is reduced by -1.000 EUR and the merchandise inventory for the buyer (BE00) is also reduced by 1.000 EUR.