Internal Elimination—Key Exercises

IMPORTANT
It is extremely important that you set up and work within your own company to maintain your data integrity. If you work within any other company, your exercises will not function as intended and the data of other students might be affected. Predictable exercise results require that your data be isolated in your own company.

Basic Data Setup

Purpose: The purpose of these exercises is to show you how to set up the basic data for internal elimination. The exercises are based on the example in the slide presentation.

Define Code String

Purpose: The purpose of this exercise is to show you how to define one code part as the elimination code part and another code part as the counter part. 

Windows:
Define Code String

  1. Populate the window to see all the code parts for your company.
  2. Select the code part that will represent the cost center, e.g., Code Part B. Change the internal name to Cost Cent.
  3. Select the code part that will represent the counter part, e.g., Code Part G. Change the internal name to Count Part and set Code Used to Yes.
  4. Select the code part that will represent the elimination code, e.g. Code Part H. Change the internal name to Elim Code and set Code Used to Yes. Also, in the Code Part Function list, click Internal Elimination. 
  5. Save your changes.

Define Own Part 

Purpose: The purpose of this exercise is to show you how to define the code part values that identify Own Part. In this example, Code Part B and cost center are used.

Windows:
Code Part Values

  1. Click the Cost Cent tab.
  2. Enter the cost centers shown in the table below.
Cost Center  Description
CHI Chicago
MIL Milwaukee
TUC Tucson
SAN San Jose
  1. Save your changes.

Define Counter Part 

Purpose: The purpose of this exercise is to show you how to define the code part values that identify Counter Part. Note that the code part values are the same as for cost center, except for Counter Part EXT, which identifies trade outside the company. You can also use this code part to identify customer groups. In this case, the counter part identifies both internal and external trade.

Windows:
Code Part Values

  1. Click the code part tab that you assigned to counter part in the Define Code String exercise above.
  2. Enter the cost centers shown in the table below.
Counter Part  Description
CHI Chicago
MIL Milwaukee
TUC Tucson
SAN San Jose
100 Customer Group 100
200 Customer Group 200
  1. Save your changes.

Define Elimination Codes

Purpose: The purpose of this exercise is to show you how to define elimination codes.

Windows:
Code Part Values

  1. Click the Elim Code tab.
  2. Enter the elimination codes shown in the table below.
Elim Code  Description
1 Elimination Code 1
2 Elimination Code 2
EXT External Transaction
  1. Save your changes.

Define Accounts

Purpose: The purpose of this exercise is to show you how to verify that the code part demands for revenue and expense accounts have Counter Part as a required code part.

Windows:
Account Types

  1. Populate the window.
  2. Query for Account Type COST.
  3. Change the code part demands for the Cost Cent and Count Part code parts to Mandatory. Save your changes.
  4. When prompted to indicate whether all accounts should be updated, click Yes. 
  5. Query for Account Type REVENUES. 
  6. Change the code part demands for the Cost Cent and Count Part code parts to Mandatory. Save your changes.
  7. When prompted to indicate whether all accounts should be updated, click Yes.

Define Internal Elimination Structure

Purpose: The purpose of this exercise is to show you how to define an internal elimination structure. The exercises are based on the example in the slide presentation.

Windows:
Internal Elimination Structure

  1. Click the General tab.
  2. Create a new record, and enter the information from the table below.
Name Description Code Part Internal Elimination Structure Code Part Counter Part Code Part Elimination Code External Code Part Value
ELIM Internal Elimination Structure B Checked Select your counter part code part, e.g., G Select your elimination code part, e.g., H EXT
  1. Save your changes. 
  2. Click the Levels tab, and enter the information from the table below in the order shown.
Level Description Level Above Elimination Code
TOP Top Level 1
REGION Region Level TOP 2
  1. Save your changes.
  2. Click the Nodes tab, and enter the information from the table below in the order shown.
Node Description Level Node Above
TOP Top Node TOP
EAST EAST REGION TOP
WEST WEST REGION TOP
  1. Save your changes. 
  2. Click the Code Part Values tab, and enter the information from the table below in the order shown.
Code Part Value Node
CHI EAST
MIL EAST
TUC WEST
SAN WEST
  1. Save your changes. Your structure is now complete.
  2. Click the View Structure tab to view the structure and see the relationships between the nodes and code part values.

Required Data

Before you begin these exercises, you need to know how to enter manual vouchers and update the general ledger. This information is provided in the following lesson: 

Journal Entry/Manual Postings

Note: Because only one elimination structure can be used at a time, make sure that you are using your own company.

Main Exercises

Create and Analyze Internal Transactions

Create Internal Transactions

Purpose: The purpose of this exercise is to show you how to create a manual voucher with internal transactions, i.e., purchases between cost centers. When the voucher is updated to the general ledger, the revenue transactions will be designated with an internal elimination code according to the structure that you have defined.

Windows:
Voucher Entry

  1. Enter a manual voucher with the information shown in the table below.
Account  Cost Center Count Part Debit Currency Amount Credit Currency Amount
3011 CHI MIL 3,000
3011 CHI TUC 4,000
1913 7,000
  1. Save the voucher, and note the voucher number.

Create External Transactions

Purpose: The purpose of this exercise is to show you how to create a manual voucher with external transactions, i.e., the cost center's purchases from or sales to external customers. When the voucher is updated to the general ledger, the revenue transactions will be designated with Internal Elimination Code EXT, which indicates external trade. 

Windows:
Voucher Entry

  1. Enter a new manual voucher with the information shown in the table below.
Account  Cost Center Count Part Debit Amt Credit Amt
3011 SAN 100 650
3011 SAN 200 1,500
3011 TUC 100 3,000
1912 5,150
  1. Save the voucher, and note the voucher number.

Update General Ledger

Purpose: The purpose of this exercise is to show you how to update the vouchers to the general ledger. The updating routine will designate the transactions with an elimination code according to the structure that you defined.

Windows:
Update GL Vouchers

  1. Make sure that your vouchers are within the suggested selection interval, and click OK. 
  2. Once the updating routine is completed, a message with information about the journal ID is displayed on the screen. Click OK. 

Note: You can now use all queries and reports in IFS/General Ledger and IFS/Report Generator to see internal transactions and to either include them in or exclude them from your reporting. 

Query Internal Transactions

Purpose: The purpose of this exercise is to show you how to verify that the transactions have been designated with an elimination code according to your structure.

Windows:
GL Voucher Rows Analysis

  1. Query for the vouchers that you created in the previous exercise.
  2. Note whether the elimination code is set in the Elim Code code part according to your structure.