Answer / chandra kumar.m

Intercomany reconciliation is reconciling between the two
branches of the same company located in multiple locations.
where as one branch acts as seller to other branch when
some product is moved from Branch A to B branch.
Eg:- when Branch A sends some products to Branch B then in
this case. Branch A becomes the seller and Branch B becomes
the purchaser.

Hence we need to reconcile between these two branches to
ensure the right figures appear on the financial statments
to the management

Answer / vivek dubey

Intercommany Reconciliation is done for the paurchase or
sale of goods/services between two legal entities of a
parent company.

Reconciliation is done to find out the difference of amount
posted in the books of both legal entities.

For example: B ltd (France) and C ltd (America) are two
legal entities of a parent company XYZ ltd.

Now, B sold good to C for $1,000.00 and recorded the entry
in their book. However, C ltd when recieved the goods,
recorded the transaction for $960.00 only because of change
in currency.
While doing reconciliation it was found that there is a
difference of $40.00, so the system would record it as
adjustment entry for $40.00 to balance the ledger.

Answer / uday mantur

Just to put in simple words about the Inter comapny
reconciliation process, it is a reconciliation between the
recievables and the payables among two branches of a
company to make sure there is no cash loss within the
Business entity and to make sure if they have any
discrepancies, the reason for the difference. Also Inter
company reconciliation keeps a record of the financial
status of a branch updated on a given period.

Answer / sunny ahuja

Transaction between subs of one parent co. are called inter
co. transactions.
By reconciling inter co. we mean to assure and authenticate
the balances of booth subs i.e. wheather subs have booked
equal nos and quantity in their respective books or not.

Answer / gaurav

I think the question can best be answered with example :

Suppose Parent company has Branch in India as well in UK .

UK Branch engages India branch to work on a contract which
UK is having with its UK Client. At the end, Uk branch
would Invoice UK client say ie GBP 100 and share GBP 30
with India , India books Invoice GBP 30 to UK Branch @75 fx
on 16th of Month , India books would hit with 30 X 75=INR
2250 as Indian books needs to be prepared in INR.

At the end of Month UK branch shows 30 GBP as Payable ,but
at the end of Month if rate becomes 1GBP=INR80 , so india
books will show 28.125 GBP ( 2250/80) as receivables since
A/R is Balance sheet item and needs to be shown at Balance
sheet rate.

So here comes Intercompany reconciliation , we need to show
30 GBP as payables in UK books and GBP 30 in Indian books .

So post a fx entry of INR 150 thereby Dr A/R account and Cr
Fx A/c or some control a/c so as to reflect A/R in India
books as INR 2400 ( equivalent @80 to GBP 30).

Answer / chaya.h.g

Intercompany (IC) reconciliation rules balance transactions
that occur between different entities in the company. IC
reconciliation adjusts for differences in the values that
are recorded by the buyer entity and the seller entity for
intercompany transactions. If, after adjustments for
currency differences, the recorded values do not match, IC
reconciliation creates balancing entries

Answer / vishal

It is a act of confirming that for any trade happened b/w
two sister concerns/entities, the account balances in the
books of both the entities should match.

Answer / bala

intercompany means transaction b\w two entities

Answer / imran basha kadu

While doing the preliminary reconciliations, If there is any
differences between TC & Counter party balances or if the
balances are not matching then we will try to figured out
I.e. what exactly the difference is belongs to ? Then we
will share our findings with counter party and TC Head to
book an a accrual journal for the difference amount based
on their approval.
E.g.. TC had a payables of GBP 1000 against Gold medal in
TC books and after done the preliminary reconciliations Gold
medal is showing GBP 1200 worth of receivables in Gold medal
books and we are missed out with GBP 200 worth of invoices
in TC books. But already AP has been closed for the
particular period and now for time being we will book the
accrual journal to match the balances in TC books with Gold
medal.
Journal Entry :
Debit – Expenses Account
Credit – IC Liability Account

Answer / vema

International groups have to consolidate all the various General Ledgers of their subsidiaries in order to eliminate inter-company flows. This is Intercompany Reconciliation. The process, which normally takes place monthly or quarterly, frequently identifies a large amount of mismatches between subsidiaries in the group. Mismatches can be with invoiced goods and services (internal Accounts Receivable vs Accounts Payable) but also with other transactions such as loans and deposits, interests on internal positions and other balance sheet items

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