IC sales-cogs elimination

Question

i have a case where the IC transactions are recorded with markup but the markup is posted in separate account to the cr of P&L in the selling co. The same is taken as separate Dr to P&L in the purchasing company. In the selling co sales and cogs reflect the cost and match always. in the purchaing co, the goods are taken to invenroy on receipt and stock is debited.
for elimination purposes, profit in selling co is matched with expense in purchasing company. so ICP accounts are created for these two to with a matching set.
say
A sells to B with cost 80 and profit 20
entity-account-ICP-data
A-Profit-B-20
B-expense-A-20
so A's value in B and B's value is A are matched based on common plug account and eliminated at common parent C.
for sales and cops elimination, the accounts need to be matched withn entity for consolidation at common parent C.how can this be achieved. These accounts are ICP flagged accounts.
A-Sales-B-80
A-COPS-B-80
can default elimination of HFM match values within same company and eliminate the balances?

Answer 1

Hi Shivaji,
As far as I understand,
I think that you tried to do following journal when you do Elimination of Sales/COGS :
Sales     80K
-> COGS   -80K
And when you do the Elimination of Inventory (Unrelized profit), you will adjust the Sales and COGS again like following (I assumed the gross profit = 10%):
Sales 20
-> COGS      -18
-> Inventory   -2 (10% * 20)
If I combine those journal, here they are :
Sales  100
-> COGS -98
-> Inventory  -2
<b>It can be done in accounting concept.</b>
<u>But in BCS system, here is how they will be handled :</u>
When you sold 100.000 within company group, You have to eliminate this sales when you do the consolidation because this is ilegal.
So you should eliminate the full of 100K
(Because you define in RFD that A has partner unit B for ITEM Sales 100K, but B has no partner unit in A since B sold the inventory to outside customer. Elimination in system only will eliminate both A and B if they match each other. SO system only take 100K worth in A to be eliminate)
Journal as follow :
Sales       100
-> COGS  -100
On the other hand,
B has 100K of COGS (because A sold to B). And then B sold 80K worth to outside customer. So now, B only has 20K of Inventory. This will be handle in Elimination of unrealized profit).
Journal as follow :
COGS   2  (unrealized profit)
-> Inventory -2
<i>If i combise those journal,
the result will be the same as the accounting concept.</i>
Hope this helps and solve your problem.