Without eliminations, group results are inflated. If a manufacturing subsidiary sells $10M of product to a sales subsidiary, both entities record the transaction, but the group as a whole earned nothing until the product sells to a real customer. Consolidation removes the internal sale, the matching purchase, the receivable and payable pair and any profit still sitting in inventory.
The hard part is rarely the elimination itself. Getting the two sides to agree comes first. Entities book intercompany activity at different times, in different currencies and sometimes at different amounts, so teams run intercompany matching and dispute resolution before eliminations can post cleanly.
In software: OneStream and CCH Tagetik post eliminations automatically at the correct ownership level during consolidation. BlackLine approaches the problem upstream, with intercompany matching and netting so balances agree before consolidation starts.
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