I am reviewing year end entries from last year. There is an audit adjustment between a foreign sub in Euro and the US parent for the intercompany accounts, a note payable and the retained earnings account done at 12-31-2013. Perhaps that was recommended by the auditors for consolidation/reporting purposes but I thought these intercompany elimination entries were only done on consolidating worksheets. Therefore, shouldn't they be reversed on 1-1-2014?
Consolidation Entries
Answers
Anon,
Not necessarily. In some cases you've got to carry forward and eliminate the currency adjustments; you've got to keep a record of the reconciling balances for the interco accounts; etc.
My understanding from what you've said is that perhaps the Auditors recommended the adjustments in the Parent's books? It depends on the nature of the adjustment; if it goes to a real adjustment account that you track, then you should leave it, as you'll need to keep making that adjustment as it changes.
KP
Thanks, the entries were strictly on the sub books going to the currency translation adjustment account.
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