NetAsset - Auto Elimination Overview

Overview

There is a lot of accounting that needs to be done for auto-elimination entries to be correct. Part of this will be handled in the NetAsset system, while the remainder will require custom manual processes in NetSuite. The article’s intention is to set the stage of what NetAsset can do and what should be expected to do manually.

Use Case

When an asset is sold between two subsidiaries within the same organizational hierarchy, a company will frequently have the requirement to record the purchased asset as a new asset on the purchasing subsidiary’s books, while upon consolidation, the entity should report the asset at the original gross and net amounts. 

In this use case, NetAsset supports the ability to create two separate assets and eliminate the new internal asset on an elimination entry during consolidation, such that the financials are properly stated within each subsidiary in the organization and top of the house.

Prerequisites

A native NetSuite subsidiary setup with the Elimination checkbox checked. The NetAsset Global Setting, Elimination Assets, enabled. 

Step by Step Process

• Transfer the Historic Asset from Subsidiary A to the Elimination Subsidiary

  • Navigate to the asset being sold intercompany.
  • Select the Transfer button at the top of the asset record.
  • Transfer the asset to the Elimination Subsidiary.
  • The following entry will be made by the system:
    • Subsidiary A Journal Entry
      • Debit: Intercompany Receivable/Payable
      • Debit: Accumulated Depreciation
      • Credit: Original Gross Asset Amount of Historic Asset
    • Elimination Subsidiary Journal Entry
      • Debit: Original Gross Asset Amount of Historic Asset
      • Credit: Accumulated Depreciation
      • Credit: Intercompany Receivable/Payable

• Create the following Manual Journal Entries

  • Creation of Intercompany Asset Purchase at Markup (Subsidiary B)
    • Debit: Fixed Asset Clearing
    • Credit: Intercompany Receivable/Payable
  • Recognition of Gain (Loss) on Intercompany Asset Sale & Eliminating Asset (Subsidiary A)
    • Debit: Intercompany Receivable/Payable
    • Credit: Gain/Loss
  •  Elimination of Intercompany Markup (Elimination Subsidiary)
    • Debit: Gain/Loss
    • Credit: Intercompany Receivable/Payable
  • Creation of Intercompany Asset Purchase at Markup Offset (Elimination Subsidiary)
    • Debit: Intercompany Receivable/Payable
    • Credit: Fixed Asset Clearing

• Create the Elimination Asset

  • Reference the NetAsset – Elimination Journal article to learn how to create the elimination asset.

• Depreciation Journal Entries in Auto-Elimination

  • Reference the NetAsset – Depreciation Elimination Journal article to learn how the depreciation journal entries are ran in the Elimination Subsidiary and Subsidiary B.