Our subsidiaries often sell finished inventory to one another
at pre-established transfer prices. Any
intercompany inventory on hand at the end of the month will contain some
intercompany profit that must be eliminated during consolidation.
We run Hyperion FDM, and HFM, version 11.1.2.3 (with the .700
patch) to load, translate, consolidate and report our results.
Our entities report their intercompany inventory on hand at
month-end in one or two asset accounts, both of which are designated as ICP,
with their offsets going to an income statement account called Profit_In_Inventory.
Our principal reporting hierarchy summarizes the base entity
data into regional consolidation nodes, which then roll up to the top-of-the-house
consolidated total. We refer to this as
our “Geographic” consolidation.
In the Geographic consolidation, the elimination of
intercompany profit in inventory works fine.
In this hierarchy HFM will properly compute an eliminating entry crediting
the balance sheet account Inventory_Interco
with an off-setting debit to the income statement account Profit_In_Inventory and post it to the [Elimination] value
dimension in the consolidation node one level about the base reporting
entity. These amounts then roll up to
the top of the house where they properly do their work offsetting inventory on
the balance sheet, and showing as an expense the value of those un-earned
intercompany profits. No problem.
However, we have recently attempted to construct two
alternative entity hierarchies. And
each of them works flawlessly, except for the income statement half of the
intercompany inventory elimination.
In one of the two new structures – the one by Business Segment
– HFM puts the elimination down on the reporting entity. It then rolls up to the consolidation node
above it in the [entity currency] value.
But then the elimination itself is eliminated in the [elimination] value
for that consolidating entity. As a
result, net income is over-stated.
In the other new structure – the one by Legal Entity – HFM
puts the elimination at the first consolidation node above the reporting
entity. It then rolls up to another node
above it in the [entity currency] value.
Here the once again, elimination itself is eliminated. As a result, net income is once more
over-stated.
It’s odd that for one new structure, HFM posts the income
statement elim at the reporting entity level, while in the other new structure,
it posts it one node above. But what’s especially
vexing is that even though the elimination appears to behave differently in each
of these new hierarchies, both result in the identical over statement of net
income.
Has anyone else attempted to create and use ancillary entity
hierarchies? Did you have issues with
the automatic elimination of a balance sheet account offset against an income
statement account? If so, how were you
able to fix it?