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Consolidation Entries

I am reviewing year end entries from last year. There is an audit adjustment between a foreign sub in Euro and the US parent for the intercompany accounts, a note payable and the retained earnings account done at 12-31-2013. Perhaps that was recommended by the auditors for consolidation/reporting purposes but I thought these intercompany elimination entries were only done on consolidating worksheets. Therefore, shouldn't they be reversed on 1-1-2014?

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Anon,

Not necessarily. In some cases you've got to carry forward and eliminate the currency adjustments; you've got to keep a record of the reconciling balances for the interco accounts; etc.

My understanding from what you've said is that perhaps the Auditors recommended the adjustments in the Parent's books? It depends on the nature of the adjustment; if it goes to a real adjustment account that you track, then you should leave it, as you'll need to keep making that adjustment as it changes.

KP

Anonymous
(Finance Director) |

Thanks, the entries were strictly on the sub books going to the currency translation adjustment account.

Anonymous
(Finance Director) |
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