We are in the process of eliminating intercompany transactions during the corporate close. In this case, we need to automatically eliminate intercompany revenue and cost of sales.
Revenue and cost elimination key points
Intercompany sales are reported with a trading partner, but cost of goods sold is without trading partner in most cases.
Because trading partner only exists on the seller side, the revenue and cost elimination is typically done using a one-sided approach. Using a one-sided approach, the elimination is triggered exclusively by the sales item and posted to both the seller and the buyer.
Note
This is referred to as a one-sided approach because it only considers the sales value and not the cost of goods sold value. This scenario is commonly used when the cost of sales account is calculated (quantity sold x unit cost) and therefore, does not include any intercompany information.
