---
title: "Intercompany elimination"
description: "What is intercompany elimination? Removing sales and balances between companies in the same group when consolidating. Learn why it matters, with an example."
url: https://1flux.ai/glossary/intercompany-elimination
last_updated: 2026-10-11
---

[Accounting](https://1flux.ai/glossary#accounting)

# Intercompany elimination

What is intercompany elimination, and why do group figures overstate without it?

Glossary Updated 11 October 2026

Definition

Intercompany elimination is the consolidation step that removes transactions and balances between companies in the same group, so group figures show only dealings with outside parties.

## What is intercompany elimination used for?

If a parent sells USD 500,000 of goods to its subsidiary, the group hasn’t earned anything from outsiders. Without elimination, group revenue, receivables and payables would all be overstated. Eliminations remove intercompany sales and purchases, receivables and payables, and any unrealised profit on stock the buyer still holds.

Example: the parent shows USD 500,000 receivable from the subsidiary and the subsidiary shows the same amount payable; both are eliminated on [consolidation](https://1flux.ai/glossary/financial-consolidation).

Eliminations only work cleanly when both sides record matching amounts, so mismatches have to be investigated before the group closes.

In 1flux

A 1flux consolidation run combines every operating entity’s ledger into a group currency, with the translation difference shown, and the one-click trading chart includes an intercompany account. [See multi-entity consolidation](https://1flux.ai/products/accounting/consolidation)

Related

## Keep exploring

### [Financial consolidation](https://1flux.ai/glossary/financial-consolidation)

Combining a group's companies into one set of figures.

### [Multi-entity](https://1flux.ai/glossary/multi-entity)

One system running several legal companies, each with its own books.

### [Legal entity](https://1flux.ai/glossary/legal-entity)

A company the law treats as separate from its owners.

### [Multi-entity consolidation](https://1flux.ai/products/accounting/consolidation)

Every company's ledger in one group currency, with a visible translation difference.

Last updated 11 October 2026