Oracle FCC provides out-of-the-box intercompany elimination process. Consolidation process eliminates intercompany balances at the first common entity.
Let’s see how amazingly easy it is to set it up and leverage FCC out-of-the-box consolidation business rule to perform eliminations.
Quick guide to FCC intercompany setup
- Create Intercompany hierarchy
FCC comes with out of the box Intercompany dimension. All entities tagged as intercompany will be populated in this dimension. In Entity dimension, Entities are tagged “ICP_Entity_Yes”
Those entities will be automatically listed in Intercompany dimension.
2. Create plug accounts
Plug accounts are created to hold the difference between the intercompany balances, If any, thus eliminating difference at first common parent between the entities. This amount is calculated during the consolidation process. Plug account must have the attribute “Plug_Acc_Yes”
3. Create Intercompany Account
Identify the Intercompany accounts in the hierarchy and
a. Tag those accounts with attribute “IC_Acc-Yes”
b. Assign appropriate Plug account to each intercompany account
That’s it! It’s that simple.
Elimination Process
Now that we have understood how to setup for Intercompany Elimination in FCC, Let’s understand how the Elimination process works with a simple example.
Let’s say we have above entity hierarchy, there was transaction of $100 between two intercompany entity under Pennsylvania, Harrisburg & Philadelphia. Each entity records its transaction as below.
| Entity | Account | Intercompany | Amount |
| Harrisburg | Acc Payable | ICP_Philadelphia | 100 |
| Philadelphia | Acc Receivable | ICP_Harrisburg | 100 |
After running the out-of-the-box consolidation, FCC eliminates $100 at its first common parent Pennsylvania. Data in FCC looks like below.
| Entity | Account | Intercompany | Data Source | Consolidation | Amount |
| Harrisburg | Acc Payable | ICP_Philadelphia | FCCS_TotalInputAndAdjusted | FCCS_Entity Total | 100 |
| Philadelphia | Acc Receivable | ICP_Harrisburg | FCCS_TotalInputAndAdjusted | FCCS_Entity Total | 100 |
| Harrisburg | Acc Payable | ICP_Philadelphia | FCCS_Intercompany Eliminations | FCCS_Elimination | -100 |
| Philadelphia | Acc Receivable | ICP_Harrisburg | FCCS_Intercompany Eliminations | FCCS_Elimination | -100 |
| Pennsylvania | Acc Payable | ICP_Philadelphia | FCCS_Total Data Source | FCCS_Entity Total | 0 |
| Pennsylvania | Acc Receivable | ICP_Harrisburg | FCCS_Total Data Source | FCCS_Entity Total | 0 |
