Consolidation entry compounding monthly
Summary
Why is our consolidation entry compounding monthly?Content
We have only used intercompany/consolidation for about 4 months.
The Balance Sheet looks great.
The P&L does not.
A consolidating entry is posting to the consolidating/clearing BU as:
DR Revenue
CR COGS
This entry is correct, to eliminate the Management Fee billed by one BU to a second BU.
What is not correct is that each month this entry compounds the amount. For example, say the monthly Management Fee is $1,000, this is what the consolidation entry is looking like:
September - DR Revenue $1,000
CR COGS $1,000
October - DR Revenue $2,000
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