Step one: Add appropriate elimination units

An elimination unit is added as the child of an existing member. Elimination units are always leaf units, that is, they have no children themselves.

Intercompany eliminations can take place between any two units that are descendents of a member with an elimination unit.

In this illustration, the region Europe has a child called Europe Elim that is an elimination unit. The region North America has a child called NA Elim that is also an elimination unit. Intercompany eliminations can take place between Great Britain, France, and Germany. They can take place between US and Canada. However, they cannot take place between Europe and North America.

To make it possible for intercompany eliminations to take place between Europe and North America, we need to add an Elimination Unit as a child of Operations.

• Intercompany transactions between Great Britain, France, and automatically are booked to Europe Elim.
• Intercompany transactions between US and Canada are automatically booked to NA Elim.
• Intercompany transactions between Great Britain, France, Germany and US, Canada are automatically booked to Op Elim.

If you intend to have only one elimination unit, you should make this unit a child of the top member of the organization to be able to eliminate all intercompany activity in the organization.