8.4 Import Consolidations & Intercompany Elimination Rules

8.4 Import Consolidations & Intercompany Elimination Rules

Quick Summary: Subsidiaries outside the Dynamics 365 Finance environment are brought in with Consolidate with import, and reciprocal intercompany balances are removed with elimination rules. This section covers both, including where elimination journals actually post.

---

1. Consolidate with Import (External / Non-D365 Subsidiaries)

For enterprise divisions running third-party ERP systems (e.g., SAP, Oracle, NetSuite) or external acquisitions:

+---------------------------------------------------------------------------------------------------------+
|                                Consolidate with Import Processing Flow                                  |
+---------------------------------------------------------------------------------------------------------+
|                                                                                                         |
|   [ External Subsidiary / Legacy ERP ]                                                                  |
|   - Exports trial balance / period transactions to CSV/Text file format.                                |
|                                      |                                                                  |
|                                      v                                                                  |
|   [ File Structure Validation ]                                                                         |
|   - Columns: Source Account, Source Dim, Amount, Currency, Target Account, Target Dim                    |
|                                      |                                                                  |
|                                      v                                                                  |
|   [ Consolidation Legal Entity (CONSO) ]                                                                |
|   - Navigate to: General ledger > Periodic tasks > Consolidate > Consolidate with import                |
|   - Select import file, specify currency conversion rate, and submit batch import.                      |
|                                      |                                                                  |
|                                      v                                                                  |
|   [ Consolidated General Ledger Updated ]                                                               |
+---------------------------------------------------------------------------------------------------------+

---

2. Intercompany Eliminations Configuration & Execution

When affiliated legal entities transact with one another, consolidated financial statements must remove all reciprocal balances to prevent double-counting internal revenue, expenses, receivables, and payables.

Common Elimination Scenarios

1. Intercompany AP / AR: Eliminates Due-To (Liability) against Due-From (Asset).
2. Intercompany Revenue / COGS: Eliminates internal sales revenue against the purchaser's inventory/cost of goods sold.
3. Unrealized Inventory Profit: Eliminates internal markup on goods held in inventory at period-end that have not yet been sold to third-party external customers.

Step-by-Step Elimination Rule Setup

1. Navigate to General ledger > Setup > Postings > Intercompany elimination.
2. Click New and configure the Elimination Rule:
   • Rule ID: ELIM_AP_AR
   • Description: Eliminate Intercompany Due-To and Due-From
   • Elimination Method: Select Net change (reverses monthly activity) or Fixed amount.
3. On the Lines tab:
   • Source Legal Entity: USMF and DEMF
   • Source Main Accounts: 130500 (Due From) and 210500 (Due To)
   • Destination Account: Elimination balance sheet clearing account (e.g., 210599).

+---------------------------------------------------------------------------------------------------------+
|                               Worked Intercompany Elimination Example                                   |
+---------------------------------------------------------------------------------------------------------+
|  PRE-ELIMINATION CONSOLIDATED BALANCES:                                                                 |
|  - USMF Books: Due From DEMF (Asset Account 130500) .................................... $50,000 (Dr)   |
|  - DEMF Books: Due To USMF (Liability Account 210500) .................................. $50,000 (Cr)   |
|  -----------------------------------------------------------------------------------------------------  |
|  ELIMINATION PROPOSAL & JOURNAL POSTING (in Elimination Entity / CONSO):                                |
|  - Line 1: Debit   Intercompany Due To Elimination Account (210500) .................... $50,000        |
|  - Line 2: Credit  Intercompany Due From Elimination Account (130500) .................. $50,000        |
|  -----------------------------------------------------------------------------------------------------  |
|  POST-ELIMINATION CONSOLIDATED GROUP BALANCE:                                                           |
|  - Net Intercompany Balance = $0.00 (Perfectly Eliminated from Group Financials).                       |
+---------------------------------------------------------------------------------------------------------+

Processing Elimination Proposals

Eliminations are generated via General ledger > Periodic tasks > Elimination proposal:

1. Select the Elimination rule, specify the Proposal date, and select the target Elimination company.
2. Click OK to generate the proposal lines.
3. Open the created elimination journal under General ledger > Journal entries > Elimination journals.
4. Review the calculated debit/credit lines and click Post to finalize consolidated group eliminations.

3. Choosing Between Import and Online Consolidation

Consolidate with import reads balances from the Consolidation account and dimension staging entities rather than from a sibling legal entity's ledger. Because the source system is outside Dynamics 365 Finance, there is no drill-back to a source voucher, and the imported balances have to be re-imported whenever the subsidiary restates a period.

Import Sequence

1. Prepare the consolidation legal entity exactly as for an online consolidation — group accounting currency, consolidation account groups, and a matching fiscal calendar.
2. Load the external trial balance through the data management framework into the consolidation staging entity, mapping each external account to a consolidation main account and each external dimension value to a financial dimension value.
3. Run Consolidate with import, selecting the date range, the consolidation account group, and the exchange rate types.
4. Reconcile the imported total to the source trial balance before running eliminations — an out-of-balance import will silently distort every downstream elimination.

4. Elimination Rules in Depth

An elimination rule is a journal-generating rule stored in the consolidation legal entity that removes reciprocal internal balances so the group statements do not double-count intra-group trading.

Run the rule from Consolidations > Eliminations > Elimination journal proposal, choose Proposal only to review, then post.

The Three Facts Candidates Miss

• Elimination journals post only in the consolidation legal entity. The source subsidiaries' ledgers are never touched, so USMF still reports its full Due From DEMF balance in its own statutory accounts.
• Eliminations are re-run per period. They are not a permanent adjustment; if you re-consolidate a period, you re-run the eliminations for that period.
• Reciprocal balances must actually agree. If USMF shows Due From DEMF of $100,000 and DEMF shows Due To USMF of $98,000, the rule eliminates what it is told to and leaves a $2,000 residual. Reconciling intercompany balances is a prerequisite for elimination, not a by-product of it — which is exactly why ledger settlement of intercompany clearing accounts is scheduled before consolidation in the period close template.