Intercompany Accounting

This guide covers intercompany transaction management and consolidation elimination in Pinkapple — relevant for organisations with multiple business units that transact with each other.

Workspace Reference

Workspace	How Users Reach It	What Users Usually Do There
Business Units And Types	Administration -> General Setup -> Business Units And Types	Confirm the source and target business units sit inside the intended hierarchy.
GL Posting Rules And Account Setup	Accounting -> Setup	Maintain intercompany receivable, payable, and elimination account behavior.
Fiscal Periods And Period-End Actions	Administration -> Financial Setup -> Fiscal Periods	Run or review period-end intercompany elimination where available.
GL Journals	Accounting -> Operations -> GL Journals	Review source, target, and elimination entries.
Financial Reports	Accounting -> Operations -> Financial Reports	Review individual business-unit reports and consolidated reports after elimination.

Overview

When business units within the same organisation trade goods, services, or funds, these are intercompany transactions. For consolidated financial reporting, these internal balances must be eliminated to avoid double-counting.

Pinkapple provides:

• Intercompany transaction tracking
• Automated elimination entry generation
• Consolidation-ready balance netting

Intercompany Transaction Flow

BU A (Source) ──── Goods/Services/Funds ────→ BU B (Target)
     │                                              │
     ▼                                              ▼
IC Receivable (BU A)                    IC Payable (BU B)

Recording IC Transactions

Intercompany transactions are captured in the intercompany_transaction register with:

• Source BU: The business unit providing the goods/services
• Target BU: The business unit receiving them
• Amount: Transaction value
• Currency: Transaction currency
• Status: PENDING → CONFIRMED → ELIMINATED

Confirmation

Both sides must confirm the transaction before it can be eliminated:

• Source BU posts to IC Receivable
• Target BU posts to IC Payable
• Both sides confirm the transaction — status moves to CONFIRMED

Elimination Process

At period-end, run intercompany elimination to net confirmed transactions:

Running Elimination

From the period-end actions available in fiscal period management:

1. Specify an as-of date (defaults to today)
2. The system identifies all CONFIRMED IC transactions up to that date
3. Nets amounts per BU-pair and currency
4. Posts elimination journal entries
5. Marks source transactions as ELIMINATED

Elimination Entries

For each BU-pair with a net intercompany balance:

Entry	Debit	Credit
Elimination at Source BU	IC Payable (consolidated)	IC Receivable
Elimination at Target BU	IC Receivable (consolidated)	IC Payable

The net effect: IC receivables and payables cancel out, showing only genuine third-party balances on the consolidated statements.

System Tags

The elimination process uses system tags to locate the correct COA accounts:

Tag	Purpose
INTERCOMPANY_RECEIVABLE	COA account for amounts owed by other BUs
INTERCOMPANY_PAYABLE	COA account for amounts owed to other BUs

These must be configured in the approved accounting tag setup and mapped to the appropriate COA accounts for each business unit.

Consolidation Reporting

After elimination:

• The consolidated Balance Sheet shows net external positions only
• The consolidated Income Statement excludes internal revenue/expenses
• Individual BU reports still show the full IC balances (pre-elimination)

Running Consolidated Reports

Financial reports with the "Include Consolidated" filter will:

1. Aggregate balances across all BUs in scope
2. Apply elimination entries
3. Present the net consolidated position

Prerequisites

Before running IC elimination:

• IC Receivable and IC Payable COA accounts exist and are tagged
• All intercompany transactions for the period are CONFIRMED
• Exchange rates are current (for cross-currency IC transactions)
• Both BUs are within the same service/BU-type hierarchy

Permissions

Permission	Description
RUN_IC_ELIMINATION	Execute the intercompany elimination process

Best Practices

• Reconcile IC balances between BU pairs before running elimination
• Run elimination after FX revaluation (revaluation may affect IC balances)
• Maintain clear documentation of IC transaction types and their COA mappings
• Review elimination results before closing the period
• For complex organisations, establish a monthly IC reconciliation meeting