Definition · intercompany
Intercompany elimination
Intercompany elimination is the practice of removing intercompany revenue, expenses, balances, and unrealized profit so consolidated statements reflect only third-party activity. For intercompany elimination, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
Also known as intercompany eliminations, IC elimination
Why it matters
Understanding intercompany elimination matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo identifies intercompany pairs across entities and shows each elimination as a computed line tied to its source transactions, so the consolidated total is defensible instead of a manual netting exercise.
In practice
Close example
Teams use intercompany elimination during close, review, or audit support when a balance or transaction needs evidence. The controller should be able to trace the number to source records, timing, reviewer, and control threshold.
Pluvo example
Pluvo identifies intercompany pairs across entities and shows each elimination as a computed line tied to its source transactions, so the consolidated total is defensible instead of a manual netting exercise.
In practice, teams should define intercompany elimination with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.
Understanding intercompany elimination matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo identifies intercompany pairs across entities and shows each elimination as a computed line tied to its source transactions, so the consolidated total is defensible instead of a manual netting exercise.
A strong workflow for intercompany elimination separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.
Pluvo identifies intercompany pairs across entities and shows each elimination as a computed line tied to its source transactions, so the consolidated total is defensible instead of a manual netting exercise.
FAQ
What is intercompany elimination?
Intercompany elimination is the practice of removing intercompany revenue, expenses, balances, and unrealized profit so consolidated statements reflect only third-party activity. For intercompany elimination, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
What gets eliminated in consolidation?
Teams use intercompany elimination when they agree on the source data, time period, owner, and decision it supports. Here, it covers removing intercompany revenue, expenses, balances, and unrealized profit so consolidated statements reflect only third-party activity, so the term should be reviewed before it is used in reporting, planning, or operating decisions.
Why do you eliminate intercompany transactions?
Understanding intercompany elimination matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo identifies intercompany pairs across entities and shows each elimination as a computed line tied to its source transactions, so the consolidated total is defensible instead of a manual netting exercise.