Retail Chains · Track 1 · Tutorial 2 of 2
Clear intercompany items in a retail chain
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 retail chain.
2Clear each item
| Item | Type | How to clear it | See |
|---|---|---|---|
| Stock from the warehouse to stores | Inventory Transfers | A rule on the intercompany sales and purchases accounts. | Eliminate sales, purchases and services |
| The warehouse’s margin in store stock | Unrealised Profit | A month-end entry from each store’s closing stock from the warehouse, at the margin for its category. It reverses automatically the next month. | Remove unrealised profit in inventory |
| Management fees and brand royalties | Management Charges, Brand Royalties | A rule on each pair of fee accounts. | Eliminate management charges |
| Shop leases with the property company | Rental / Lease Adjustments | An entry from the lease schedule, taking out the stores’ right-of-use assets, lease liabilities, depreciation and interest against the property company’s rent. | Make rental and lease adjustments |
| Unpaid invoices | Trade Receivables / Payables | A document entry at each month end. Investigate any difference before the balance sheet is final. | Eliminate trade receivables and payables |
| Loans and dividends | Intercompany Loans, Dividends | A rule on the loan accounts; a GL entry for each dividend. | Eliminate loans and interest |
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 month-end entries for the margin still in stock, from each company’s closing stock.
- 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 retail chain, 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