Axapta consolidation and Intercompany elimination
Financial Consolidation is one of most important part of any group reporting. Consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements. Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge the overall health of an entire group of companies as opposed to one company's standalone position.
AX has the capability of doing the financial consolidation, listed below are the key features of AX consolidation.
• Consolidate companies whether they reside in the same database or in different databases
• Map the Chart of Accounts and dimensions in a subsidiary to the consolidated company
• Specify how the exchange rate should calculate for the consolidation
• Designate the percentage of ownership that should roll into the consolidated company from the subsidiary
Types of consolidation in AX
When the consolidated company and the subsidiaries are in the same database, an online consolidation is performed. The ledger transactions of the subsidiary companies are consolidated into a single company identified as the Consolidated Company.
Consolidation, Export/ Import:
In an export or import consolidation, the subsidiary legal entities are in different databases than the consolidated legal entity. The subsidiary data is exported to files that are created automatically. Those files are then imported into the database of the consolidated legal entity.
Consolidation Mapping Process:
• When the parent and subsidiary company shares the same account structure, a normal consolidation can be done.
• When the account structure in the parent and subsidiary company are different, then the accounts of both the companies must be mapped to the ledger accounts of the consolidation company.
• When the parent company and subsidiary deals in different currencies, then during consolidation, the subsidiary company’s currency should be converted to parent company’s currency and then consolidated.
Transactions that occur between legal entities that are part of the same organization must be eliminated, because consolidated financial statements must include only transactions between the consolidated organization and other entities outside that organization.
Predefined elimination rules create elimination transactions in a company specified as the destination company for eliminations. You can generate the elimination journals during the consolidations process or by using an elimination journal proposal.
Elimination rules define how to eliminate transactions between a parent company and a subsidiary company.
• Elimination rule is stored based on each company and must be unique
• Elimination can be done for an account’s net change for a specified date range, or for a specified fixed amount.
• Elimination journal proposal can be run along with the consolidation process, or separately after the data is consolidated and confirmed as accurate.
• Consolidation company is created as a separate company, thus retaining the data of subsidiary companies intact
• Dimensions can be updated as is from subsidiary companies, or mapped to dimensions specifically required for the consolidated data
• Consolidation inquiry form will display the transactions posted during the consolidation process
• Transactions posted during the consolidation process can be removed if identified as erroneous
About the Author
With 13 years of experience in ERP, specialising in AX functionality across versions , Solution designing ,Project Management and delivery.
Rohan also has special interests in reading about new business processes and features along with understanding their viability. He also enjoys spreading this message across through his blogs.