Eliminations between Balance & P&L accounts
Hi everyone; we have an application using standard elimination, we have been used eliminations between balance account and P&L accounts, I created a new account in Balance sheet accounts with plug ac...
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We are experiencing exactly what you have described here. Still looking for a solution, but someone has proposed creating a calculated account in Equity that copies the P&L expense as a plug at parent entities. That seems complicated and I'd rather find a "configuration" solution.
I have had to eliminate P&L accounts to the BS on a number of occasions. In fact, I seem to have to do it at every build lately.
I'm not an accountant by training, so I apologize in advance if my description sounds confusing for trained accountants. At the end of the day, it's just adding and subtracting. ;)
The root of the problem is that the NetIncome, being a schedule, gets rolled into the Retained Earnings BS_YTD_NI account. That's not an issue for P&L accounts that eliminate within the P&L, as those will have no overall NetIncome impact.
When eliminations span between the P&L and BS, that will impact the NetIncome. As such you need to eliminate the P&L account, and similarly the portion that rolled into BS_YTD_NI. But if both the P&L and BS_YTD_NI account share the same Plug account, you will double eliminate one side of the transaction, resulting in the Elims being OOB. The simple solution is to configure the P&L or BS_YTD_NI account to use a dummy Plug account that resides outside of the BS, so you are only eliminating the P&L side once, and performing a second one-sided elimination.
Another problem you can run into is if you strip off IC detail when rolling the P&L data into BS_YTD_NI, which will prevent the elimination from occurring in BS_YTD_NI. In this situation the Elims crossing between the P&L and the BS will balance, but the post eliminated data will be OOB, as the BS_YTD_NI <> the P&L (P&L got eliminated but not BS_YTD_NI). If you are eliminating between the P&L & BS, the BS_YTD_NI needs to retain IC detail, but only for the P&L accounts that are to be eliminated to the BS.
I can't emphasize the last part of the prior sentence enough. When rolling the P&L to the BS_YTD_NI, you must only include IC detail for the P&L source accounts that are to eliminate to the BS. Otherwise, you will be double eliminating data in BS_YTD_NI that eliminated within the P&L, throwing those Elims OOB. You need to write a data buffer handler to figure out what IC data to keep/ditch when rolling the P&L to the BS.
If you have multiple plug accounts crossing between the P&L and the BS and choose to tag the BS_YTD_NI accounts with the real BS plug accounts, then you will need a BS_YTD_NI account for each BS Plug account, as you can only assign one plug/account. If you want to roll all P&L IC detail to the BS_YTD_NI, you need to make sure the P&L IC accounts roll to a BS account not having a Plug.
I run into the same need with NCI/partial ownership.
Thank you for the detailed explanation. It is good to know that we are not alone.
We will post our resolution here so that others benefit. This could result in flagging your post as “Mark as Solution”.
For completeness, if one is unable to or does not want to write a data buffer handler to figure out what IC data to keep/ditch, you can also just plug any IC elim OOB back to the BS_YTD_NI. That approach can be handled with a trivial Calculate() statement. That method is in a similar vein as how many people compute CTA. I neglected to mention that option, as I don't like plugging things since plugs can often hide other underlying problems.
