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Normal business relationships among a parent and subsidiaries cause intercompany transactions that need to be recognized in the separate financial statements of these entities. When the time comes for periodic reporting, the parties engage in reconciling their accounts. In this article we will review the reasons why intercompany reconciliations are needed and look at reconciliation procedures.
Intercompany reconciliation means reconciling the ledger balance of both companies in their books.and reconcile the diffrence.
Inter company reconciliation is process of matching general ledgers of subsidiary companies. The mismatches may be because of currency conversion rate or may be due to manual recording errors. This differnces needs to be identified and fixed for the periodic financial reporting.
Intercompany reconciliation means reconciling the ledger balance of both companies in their books.
For Example: Company A & B are sister concerns and there are many transactions in a year at day end we have to check the balance of Company B in A company books and balance of company A in B company books both the balances must be equal. If company A balance in B books is 5000DR then company B balance i A books must be 5000CR
Reconiling GL accounts, Vendor Accounts and Customer Accounts of group companies are called inter company reconciliation.
International groups have to consolidate all the various General Ledgers of their subsidiaries in order to eliminate inter-company flows. ... The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group.
The balances between the groups / subsidiaries need to reconcile. Let take example of Group (A) and its subsidiary (B). If the Group (A) books showing the receivable from subsidiary B is 10,000 US dollar then it means that Subsidiary (B) books must show payable to Group (A) exactly the same amount 10,000 US dollar. If the amount is not reconciled, then it need to be further investigated if any transaction is not recorded in one book and that need to be incorporated to clear inter-company balances.
Normal business relationships among a parent and subsidiaries cause intercompany transactions that need to be recognized in the separate financial statements of these entities. When the time comes for periodic reporting, the parties engage in reconciling their accounts. In this article we will review the reasons why intercompany reconciliations are needed and look at reconciliation procedures.
The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group.
International groups have to consolidate all the various General Ledgers of their subsidiaries in order to eliminate inter-company flows. This is Intercompany Reconciliation. The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group. Mismatches can be with invoiced goods and services (internal Accounts Receivable vs Accounts Payable) but also with other transactions such as loans and deposits, interests on internal positions and other balance sheet items.
