Intercompany Eliminations · Track 4 · Tutorial 2 of 5

Allocate a difference on a manual entry

The two sides of an intercompany item rarely agree to the cent once they are translated into the group currency. A manual entry can’t be confirmed until you say what the difference is. Say it accurately: the treatment decides where the difference ends up.

You will needA GL or document entry entered, as in Post a GL elimination entry. The cause of the difference, from the two companies’ books. Administrator or Journals & Eliminations Admin access.

By the endCompany A’s and Company B’s October balances eliminated, with 1,840.00 left as a timing difference on Company A’s receivable and 105.60 posted as FX.

1Know what each treatment does

Treatment	Use it for	What is posted
FX difference	The sides agree in the companies’ own currencies, but not once translated.	The amount, to a profit and loss account of the group.
Timing difference	One company has booked something the other hasn’t yet.	Nothing extra. The line you choose on the larger side is eliminated for less, so the amount stays on that company’s account until the other company books it.
Write off	A small difference nobody will chase, such as rounding or a bank charge.	The amount, to a profit and loss account of the group.

A difference can have more than one cause, so you can split it across several treatments. A mistake — a wrong amount or account in a company’s books — isn’t a difference to treat: fix it in that company’s books and reload.

2Find the causes

Your Group clears the fees Company B owes Company A with a rule, as in Explain and clear intercompany differences. A group without that rule clears the same balances by hand, from Intercompany → Trade Receivables / Payables, like this.

At the end of October, Company A shows SGD 48,000.00 on 1250 Due from Company B. Company B shows AUD 51,400.00 on 2150 Due to Company A, which is SGD 46,054.40 at 0.8960. The entry’s two sides differ by 1,945.60.

The October balances between Company A and Company B: a debit line for Company B, 2150 Due to Company A, AUD 51,400.00 at 0.8960, and a credit line for Company A, 1250 Due from Company B, SGD 48,000.00; a difference of 1,945.60 requiring treatment — The difference to explain (1).

Cause	Amount	Treatment
Company A invoiced October’s fee of 1,840.00 on 31 October. Company B records it in November.	1,840.00	Timing difference
The rest: Company B’s AUD balance translates to less than the SGD amount it settles.	105.60	FX difference

3Allocate the timing difference

With the lines entered, click Next. Allocate Difference Treatment opens with one FX difference for the whole 1,945.60.
Change its Treatment to Timing difference.
Choose the Organisation Company A, and the Account 1250 - Due from Company B.
Change the Amount to 1840, and enter the Justification October fee not yet recorded by Company B.

A timing difference can only use a company and account the entry’s lines already use, and it must be on the larger side — here Company A’s credit of 48,000.00, the side that has booked the fee.

4Allocate the rest

Click + Add treatment. A new FX difference is added for what is left: 105.60.
Keep FX difference, choose the group account 7200 FX Gain/Loss, and enter the justification AUD rate on the October balance.
When the summary shows Difference fully allocated, click Confirm.

Allocate Difference Treatment with two treatments: 1,840.00 as a Timing difference on Company A’s 1250 Due from Company B, and 105.60 as an FX difference on the group account 7200 FX Gain/Loss; Difference fully allocated, then Confirm — The timing difference on Company A’s receivable (1), and the rest as FX (2).

Allocated, Remaining	The total of the treatments, and what is still to allocate. Confirm needs Remaining at 0.00. + Add treatment can’t be clicked once nothing remains.
FX and Write off	Always post to Group, on a profit and loss account the entry’s lines don’t use. Two treatments can’t use the same account.
Justification	Every treatment needs one. It stays with the entry, so write what a reviewer needs to know.

5Check the result

Open the group’s Balance Sheet and Profit & Loss for October with Show Entities on.
Open the entry again from the list on Trade Receivables / Payables.

Check

In the group column, the account 2150 is mapped to is zero, the account 1250 is mapped to shows 1,840.00 — the fee Company B hasn’t recorded — and 7200 FX Gain/Loss holds 105.60. Reopened, the entry shows the full 48,000.00 on Company A’s line and both treatments, as you entered them.

In November, once Company B records the fee, the 1,840.00 is in both companies’ balances and November’s elimination clears it.

6If something goes wrong

Timing treatment must reduce an account on the larger side of the entry.	The timing difference is on the smaller side’s line, or is larger than that line. Choose the company and account of the side that has booked more.
Timing difference treatments must use an organisation and account selected in the elimination entry.	Choose one of the entry’s own lines.
FX and write off treatments must use a P&L account.	Choose a profit and loss account of the group.
Treatment amount must equal the calculated difference.	Adjust the amounts until Remaining is 0.00.
Each difference treatment amount must be greater than zero.	Remove a treatment you don’t need, rather than setting it to 0.
Each difference treatment requires a justification.	Enter one on every treatment.
The FX amount is large	It is almost never exchange. Check each line’s rate and amount, and look for an item one company hasn’t booked.

Want more detail? See the documentation

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