Construction Groups · Track 1 · Tutorial 2 of 2
Clear intercompany items in a construction group
The same items come round every month. This is how to clear each one in BrizoConsol, in the order that closes the month cleanly, with links to the accounting behind them.
1Know the items
Each item is cleared under the type set up for it in Set up intercompany types for a construction group.
2Clear each item
| Item | Type | How to clear it | See |
|---|---|---|---|
| Management fees from the holding company | Management Charges | A rule on the fee accounts. If a company is in another currency, use Method 2 with FX. | Eliminate management charges |
| Plant hire charged to contracting companies | Plant Hire | A rule on the hire income and hire cost accounts. Only the hire comes out: the plant company’s depreciation is a real group cost and stays. | Make rental and lease adjustments |
| Subcontract work between contracting companies | Subcontract Work | Document entries from the invoices and bills when the accounts also hold work for outside clients; a rule when they hold only group work. | Eliminate sales, purchases and services |
| Retentions held on subcontract payments | Retentions | A GL entry for the retention balance at each month end, entering only the change after the first month. | Eliminate trade receivables and payables |
| Unpaid invoices between companies | Trade Receivables / Payables | A document entry at each month end from the unpaid invoices, or a rule on dedicated intercompany accounts. | Eliminate trade receivables and payables |
| Loans to project vehicles, and their interest | Intercompany Loans | A rule on the loan and interest accounts, or a GL entry for a one-off advance. | Eliminate loans and interest |
| An asset one group company builds for another | Fixed Assets | A GL entry taking the builder’s margin out of the asset, then the extra depreciation on it every month. If the builder’s costs are in Direct Costs accounts, which Fixed Assets doesn’t accept, use Other Eliminations for the entry. | Eliminate fixed asset transfers |
A rule suits an item that recurs on accounts holding nothing else; see the Automate with rules track. When the accounts also hold outside business, clear the item from its invoices and bills instead.
3Close the month in order
- Load every company’s month, so the rules run on the consolidation with both sides in place.
- Enter the document entries for unpaid balances at the month end.
- Enter the GL entries for one-off items in the month: dividends, asset transfers, new loans.
- Clear Intercompany → Elimination Review, as in Work through Elimination Review.
- Check each type on Review → Month End Status, as in Check eliminations on Month End Status.
Check
On the group’s Balance Sheet and Profit & Loss with Show Entities on, every intercompany line is zero in the group column, and nothing for the month is waiting in Elimination Review.
4Read more about the accounting
The BrizoConsol blog goes through the accounting behind these items for a construction group, with worked examples:
5If something goes wrong
| An item is still in the group figures | Its accounts aren’t in a rule or entry, or one company booked it in another month. Check both companies’ books for the month. |
|---|---|
| The same rule waits in Elimination Review every month | Its method or tolerance doesn’t suit the usual difference. See Explain and clear intercompany differences. |
| A rule also eliminates outside business | The account isn’t only intercompany. Delete the rule and clear the item from its invoices and bills. |
Want more detail? See the documentation