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Balancing Intercompany Payables and Receivables

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What is the impact of not balancing intercompany payables/receivables on a monthly basis? What is the impact on not eliminating intercompany payables/receivables during the consolidation? Is there an instance where either of these two practices would be acceptable?

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In a 300+ word solution, the three questions are carefully answered for better understanding of the impact of intercompany transactions.

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What is the impact of not balancing intercompany payables/receivables on a monthly basis?

Not balancing intercompany transactions risks the recording of a related party transaction on one set of books but not the other. In reconciling 'interco' accounts, those omissions would show up. The results of what is effectively a one-sided entry in consolidation will overstate accounts on one entity compared to another. For example, P sells inventory to S. P records a sale but S does not increase inventory or record the payable. Intercompany accounts are out of balance as well as S's inventory is understated and S' ...

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