Inter-company eliminations within Reporting

Note: This article applies to Spotlight Reporting.  If you're using Spotlight Multi, please refer to our separate article.

• To set up your intercompany accounts
• To show the elimination values on your reports
• Eliminations and exchange rates
• Eliminating part of an account balance

When you work with a group of companies, there may be situations where one company within the group sells or buys from another.  If you want to adjust your reports to account for these intercompany transactions, you can do this automatically in Spotlight.

To set up your intercompany accounts

You can set up your intercompany accounts from within the Customise Data option.

To add an elimination

1. Open Customise Data then click Eliminate Accounts.
2. From the Organisation drop-down list, choose the first organisation you want to work with.
3. From the Account to Eliminate drop-down list, choose the intercompany account, then click Add Elimination.
4. Repeat the process for any other organisations which contain intercompany accounts.
5. When you've added all of the required accounts, click Save.

Note: Spotlight eliminates the full account balance for each month.  In the data grid, eliminated accounts have an E icon next to the account name.

To remove an elimination

1. Open Customise Data then click Eliminate Accounts.
2. From the right-hand pane, click the X icon alongside each account you want to remove, then click Save.

To show the elimination values on your reports

If the eliminations values don't automatically appear on your report, to show these you need to add the new versions of the relevant pages.

1. In the Customise Layout tab, click Add Page.
2. In the Page Name box, enter the name you want to use for the new page.
3. From the Page Type drop-down list, choose Profit and Loss Analysis.
4. From the Insert After drop-down list, choose where you want to place the new page then click Save.
5. Repeat the process for the Entity Analysis, Group Balance Sheet Analysis and Entity Balance Sheet Analysis pages.

The Entity Analysis and Entity Balance Sheet Analysis pages will show your eliminations.  You can use the Customise Columns option to choose a detailed or summarised view.

The FX Reserves account

The FX Reserves account that appears in the balance sheet report is the foreign exchange rate difference between showing the Current Year Earnings based on monthly converted profit vs. year to date converted profit.  This line is needed to balance the report.

If you want to combine this line with the adjustment row held in the Eliminate Accounts screen, ensure that each account has the same name.  To amend the name of the balance sheet account, open the Customise Rows option, click the pencil icon and amend the name of the account.

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Eliminations and exchange rates

If the organisations in the group use different currencies, there will be some exchange rate variances.

Spotlight posts these to the foreign exchange adjustment accounts in the profit and loss and balance sheet reports.  By default, these are FX and other Adjustments on the profit and loss report, and FX Reserves on the balance sheet.  If required, you can rename these accounts within the Eliminate Accounts option.

Note: These accounts capture the differences after eliminations, so that the net effect on profit is zero. If a larger value appears for the adjustment, please check that you’ve reconciled the intercompany accounts in your accounting system, and that you’ve selected all of the relevant accounts in Spotlight.

Eliminating part of an account balance

If you can't eliminate the full balance of an account because the account also contains other transactions, you will need to use a different method to deal with the eliminations.  There are two options:

• Create adjustment accounts in Spotlight to cancel out the intercompany transactions.
  
  To do this, from the Customise Data tab for the individual entity locate the section in which you want to record the adjustment, then click Add Account.  You can then enter the adjustments as a negative value.
  
  
• Use the Excel import to cancel out the intercompany account balances.
  
  To do this, create a new 'eliminations' organisation in Spotlight.  You can then use the Excel import function to create a Chart of Accounts (use the Chart of Accounts under one of the trading entities) for the ‘eliminations’ company. Add the ‘eliminations’ company to your group report. Now enter any intercompany adjustments as a negative value in the ‘eliminations’ company. Your group report will now include an ‘eliminations’ column which cancels out the intercompany transactions.

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