What Is a Consolidation Company?

You can transfer balances from more than one general ledger company to a designated consolidation company to consolidate financial information for an organization. The consolidation process copies balances from the source companies that process journal entries to the designated consolidation company. A consolidation company is used for reporting purposes only.

Note: You can consolidate already consolidated companies. For example, you can consolidate 19 companies into one company and then consolidate that one company with two other companies.

Consolidation Company Considerations

Note: As an option to using a consolidation company, you can select a range of companies or a company group when creating Report Writer reports.

If you use a consolidation company, you will need to consider the following in your setup and periodic processing:

  • Periodically copy balances from the source companies to the designated consolidation company.

  • Define a company to use for consolidation purposes only. When you define the consolidation company, select Consolidation in the Status field on Company (GL10.1).

  • If you need to preserve manual entries for the consolidation company, define a separate general ledger company for the manual entries.

  • When you define each source company, select Yes in the Currency Translation field on Company (GL10.1). This makes the company balance information available for transfer to the consolidation company.

  • If the company base currencies are different, the account balances are translated to the consolidation company's base currency using the translation rate in effect for the period.

  • For ease of use and to get the most detailed reporting, assign the same chart of accounts and define the same number of levels for the consolidation company and each source company.

What Happens When I Consolidate?

The consolidation process copies balances from the source companies that process journal entries to the designated consolidation company. If the company base currencies are different, the account balances are translated to the consolidation company's base currency based on the translation rate in effect for the period.

Note: Journal entries for balance sheet account ending balances are flagged to auto-reverse, except in the last period of the year.

Translation Calculation (GL195) creates:

  • transactions for balance sheet account ending balances,

  • transactions for income statement account period balances, and

  • a balancing translation gain or loss journal entry if the base currencies are different and the translated amounts do not net to zero.

Translation gain and loss Translation balance sheet transactions are reversed in the next period when Period Closing (GL199) is run in the consolidation company.

Note: If you are closing a consolidation company for the last period of the year, the translation balance sheet entry is not auto-reversed. Instead, GL199 creates a reversing entry for period one after it has performed the year-end retained earnings process.

At the end of a fiscal year, GL199 also creates a reversing journal entry for all balances in the consolidation company. To preserve manual journal entries, use the consolidation company for consolidation purposes only. Define a separate general ledger company for the manual entries, and then consolidate the balance information to the consolidation company.

If you run GL195 for a range of periods, the resulting journal entries are created for the last period in the range, or to the current period if the last period is closed. The journal entries have a "CT" source code and a Released status. You must post these journal entries before you close the accounting period for the consolidation company.

For predictable results, make sure you assign the same chart of accounts and define the same number of levels for the consolidation company and each source company. The consolidation company must have Consolidation selected in the Status field on the Main form tab on Company (GL10.1). Each source company must have Yes selected in the Currency Translation field on the Currency form tab in GL10.1.