Intercompany Eliminations in Odoo Consolidation#
When preparing consolidated group financial statements, intercompany transactions must be eliminated - otherwise the same revenue appears in both the selling subsidiary's books and the buying subsidiary's expenses, inflating the group totals.
Types of Intercompany Transactions to Eliminate#
| Transaction | Seller records | Buyer records | Elimination |
|---|---|---|---|
| Intra-group sale | Revenue | Cost/Expense | Eliminate both |
| Intra-group loan | Loan receivable | Loan payable | Eliminate both |
| Intra-group dividend | Dividend income | Dividend payment | Eliminate both |
| Intercompany management fee | Revenue | Management fee expense | Eliminate both |
Odoo Accounting Consolidation Module#
Install Accounting Consolidation (if available for your Odoo version) or use a manual approach with consolidation journals.
Accounting → Accounting → Consolidation → New Consolidation:
- Select the consolidation period (fiscal year)
- Add subsidiary companies
- Set elimination rules per account pair
Manual Elimination Journal Entries#
For groups managing consolidation manually:
For intra-group revenue/expense:
- Debit: Intra-group Revenue (at the selling entity's account)
- Credit: Intra-group Expense (at the buying entity's account)
- Both entries are in the consolidation journal (not posted in the individual entities)
For intra-group balances:
- Debit: Intercompany Payable (at the paying entity)
- Credit: Intercompany Receivable (at the receiving entity)
Intercompany Account Mapping#
For eliminations to work cleanly, each intra-group transaction must use designated Intercompany accounts:
- 800000: Intercompany Sales Revenue
- 810000: Intercompany Purchases
- 820000: Intercompany Receivables
- 830000: Intercompany Payables
These accounts make it easy to identify and eliminate all intra-group items at period end.
Unrealized Profit Elimination#
If Company A sells goods to Company B at a markup, and Company B still holds those goods in inventory at period end:
- The profit (A's sale price minus A's cost) is unrealized from a group perspective
- It must be eliminated from consolidated inventory and profit
Calculate the unrealized profit: (Intercompany selling price − A's cost) × % still in B's inventory.
Currency Translation#
For multinational groups, subsidiaries report in local currency. For consolidation:
- Translate subsidiary financials to the group currency at the closing rate (balance sheet) or average rate (P&L)
- Translation differences go to Other Comprehensive Income (OCI)
- Eliminations are performed in the group currency