A consolidated group in Fathom can have inter-company eliminations configured. You can access the setup for eliminations in the group setup under 'Step 3: Chart of Accounts'.
Eliminations allow you to remove the impact of transactions between companies in a group, resulting in a more accurate view of consolidated performance.
Typical use of an elimination would be to account for inter-company loans or inter-company management fees within a group.
To perform eliminations, simply hover over an account, and click on the 'Eliminations' button.
You are then able to eliminate this account for any or all underlying companies.
We recommend that inter-company transactions are isolated in specific accounts. This approach means that each elimination is applied once and is then maintained automatically for subsequent updates of the financial data.
You will be able to preview the order/structure of your accounts, as well as a summary of eliminations performed. To do so, scroll to the bottom of the screen and download the detailed consolidated financial statements for a recent period.
Within this report you can hover over any elimination amount to display the contribution from each company within the group.
Performing Specific Elimination Adjustments
Fathom allows you to import an excel spreadsheet which details specific elimination adjustments, which are applied to the consolidated financials only.
Detailed instructions for both types of eliminations can be found here, in this Guide to Consolidations. See pages 25-28.
In summary, to add elimination adjustments, go to "Add a company", then select "Excel" as the source, then import a spreadsheet, it will appear as another "company" in Fathom. We refer to this as "Eliminations Co".
You should then add this "company" to your consolidated group. Click on "Manage group" in 'Step 1' of the setup for the group. The financials of this entity should include only the journal adjustments that you wish to make to the consolidated group. The import spreadsheet MUST include the word "eliminations" in its name (Cell B1).
Fathom will recognise the adjustments contained in this import file in the eliminations column of your reports; this adjustments “entity” will not be shown as part of the performance of the group in analysis and reports. For instance, when viewing the Excel report called "Multi-currency consolidated financial results, including eliminations ", you will see data for "Eliminations Co." shown in the Eliminations column only.
Performing eliminations in a multi-currency group
For multi-currency consolidations, additional elimination adjustments are often required, to balance the balance sheet. The reason for this is that movements in exchange rates cause the inter-company related accounts to no longer contra each other out, after these amounts are translated using the current exchange rate.
In these situations, we recommend applying an additional elimination adjustment (loaded via Excel) to the eliminated account, which accounts for the difference and puts the balance sheet back in balance. For more information, see article: Multi-Currency Eliminations.