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intercompany accounts

Hi Robert,

I like how the related/intercompany stuff is at the bottom of the COA…..but I have never seen that in actual practice.

How does that work when preparing the FS? Separate section adjusting the income statement at the end?

Most times I have seen intercompany intermingled in with assets/liabilities and other.


Hi James,

One reason to keep them separate is that not every company has interco transactions. The companies that don't need them, can simply ignore them without their interfering with the rest of the COA.

For companies that do need to eliminate interco items in consolidation, keeping them totally separate simply makes the job easier.

How does it work?

One prepares one set of FSs without the interco items another with the interco item, compares them, and then eliminates the differences. 

This is especially helpful when identifying the impact of interco transactions on items like inventory, which is not generally segregated like payable or receivables are.

I it also helpful for a comapny that uses simple accounting software not designed to produce consolidated reports like a lot of comapnies here in the EU do.



Hello everyone, Robert

I run a small group of companies, (parent and 2 subs) that utilizes simple accounting software, which, while user-friendly, isn't designed for generating consolidated reports and has a very basic chart of accounts (COA). Although the software is accessible, I'm beginning to question whether there might be a more sophisticated option available that still avoids unnecessary complexity. Do you have recommendations for accounting software available in Europe that supports English and is well-suited for a company structure requiring intercompany consolidations, intercompany reconciliations, and offers a robust COA?

Regards Alexander

Unfortunately, I cannot be much help. The small local companies I work with use local software. If they need to create IFRS reports, they usually  do it in excel. 

He bigger one’s use a wide verity, but I don’t really deal with SW. Mostly, I just focus on compliance. I have heard good things about Sage though.

In any event, most small companies gravitate to QuickBooks, This page also goes through  a variety of options.

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