Intercompany Eliminations for Joint venture / Associates.

[madhu_v5]

Deal All,

There is a scenario on How the joint venture company can work in Intercompany elimination.

Could you please explain how it works?

Thanks,

Rao.

[former_member186338]

Sorry, but the question is too generic...

[madhu_v5 · Accepted solution]

Hi Vadim,

My question is that, normally elimination will happen with the subsidiaries.

Is there any special treatment for Eliminations for Joint venture or Associate companies or same as like normal elimination.

Is Inter company eliminations can happen for Joint venture companies?

Thanks,

Rao

[former_member186338 · Accepted solution]

Sorry, but you don't even explained what BPC you are using... Standard or embedded!

[former_member186338 · Accepted solution]

P.S. It's the question to finance people!

[akos_beres · Accepted solution]

Rao,

As Vadim mentioned you need to provide a bit more detail on the setup. If you were to setup a formal consolidation model supported by an ownership model, you can apply different rules to different types of relationship between companies during eliminations. The ownership model will store the ownership percentages, the type of elimination that you want apply and the rules that describe the specific calculations. If you are not planning to use a formal consolidation type of setup but want to use a simpler rule like US elimination in a Finance type model, you can write script logic to mimic the consolidation for joint ventures but this can get messy really quick. So to answer your questions specifically:

"Is there any special treatment for Eliminations for Joint venture or Associate companies or same as like normal elimination?"

The difference is mainly in control. In a subsidiary relationships a company controls what happens the assets\liabilities and the generated income. In a joint venture, generally assets remain with the companies entering the venture and the companies share the costs\income. So in a simplified way accounting for it could be similar to what happens to minority interest where some part of a profit/loss hits a companies P&L but the balance sheet is not affected. Now the particular setup can vary and you could have shared assets as well.

"Is Inter company eliminations can happen for Joint venture companies?"

Yes you can create a rules for this in BPC

Hope this helps!

Akos

[former_member449239]

Thanks a lot Akos for the reply on this.

Is the business rule and configuration setup should be same as normal Inter-company elimination?

Thanks,

Rao

[former_member449239]

can we do it in BPC?

[akos_beres]

the short answer is yes

[former_member449239]

Hi Anjaneyulu,

Thanks for your reply.

Can you proceed with the same process as normal elimination for this Associates / JV case?

Thanks,

Rao