# What a good elimination journal looks like, and how to document it

> Five elimination journals for the example group, line by line: the reference, the source amount, the rate, the reason. Then how to write each one up and what support sits behind it.

Source: https://finconsol.com/blog/elimination-journal-entry-example/ (updated 18 December 2026)

## In short

A good elimination journal removes one intragroup balance or transaction per line pair, in the group currency, with the source amounts, the rate, a reference and a reason. It is written up in words, with the confirmed balances and the rate table behind it. It never hides a difference that has not been explained.

Key takeaways

- **One journal, one purpose.** A balance, a sale, a dividend or a loan each get their own journal, so every line can be traced and reversed.
- **Show the source.** Each journal states the amount in the company's currency, the rate and the group currency result.
- **Eliminate only what is agreed.** The smaller side goes in the journal. The rest stays on the open list with an owner.
- **Document each journal where the month is kept,** with the confirmed balances, the rate table and the open list behind it.

## What is an elimination journal?

An elimination journal is an entry made at group level only. It sits in none of the companies' own books. Its job is to remove what the companies owe or sell to each other, so that the group accounts show only dealings with the outside world. The standards require intragroup assets, liabilities, income, expenses and cash flows to be eliminated in full[1](#src-1).

The journal is a consolidation adjustment. If an error sits in a company's books, correct it there. If the cause is timing or a rate policy, record it as a visible item in the group worksheet. The journal itself should only ever remove what is agreed.

## What does a good elimination journal look like?

The example group is small enough to show in full. At 30 September 2026 Zenvara and its four [subsidiaries](/blog/glossary/subsidiary/) had five intragroup items to remove. Each is its own journal, in pounds sterling, using the group's [closing rate](/blog/glossary/closing-rate/) for balances and its [average rate](/blog/glossary/average-rate/) for the month's sales.

*Exhibit 1. Elimination journals, 30 Sep 2026GBP*

| Journal line | Debit | Credit |
| --- | --- | --- |
| EJ-01 Intercompany payable, FernhollowBalance with Zenvara, both sides agree | 1,240,000 |  |
| Intercompany receivable, Zenvara |  | 1,240,000 |
| EJ-02 Intercompany payable, PalmridgeSmaller side, AED 368,450 at 0.2040 | 75,164 |  |
| Intercompany receivable, ZenvaraZenvara shows 77,377. The 2,213 stays on the open list |  | 75,164 |
| EJ-03 Intercompany payable, Kestrelwick | 317,500 |  |
| Intercompany receivable, Fernhollow |  | 317,500 |
| EJ-04 Intercompany payable, Quillfern | 129,000 |  |
| Intercompany receivable, Palmridge |  | 129,000 |
| EJ-05 Services revenue, ZenvaraServices to Palmridge, AED 400,000 at the September average 0.2025 | 81,000 |  |
| Services cost, Palmridge |  | 81,000 |
| Total | 1,842,664 | 1,842,664 |

Example group used across Finconsol guides. Figures rounded to the pound.

Four things make this journal good rather than merely balanced.

1. **A reference and a period.** EJ-02 can be found, discussed and reversed by number, and it belongs to September 2026 only.
2. **Both companies named.** Each line says which company and which counterparty it removes.
3. **The source amount, the rate and the result.** A reviewer can check AED 368,450 at 0.2040 in ten seconds.
4. **A reason in words.** “Smaller side; difference of 2,213 open, owner Palmridge finance” tells the next reader what was left out and why.

## Why is the difference not in the journal?

In EJ-02 Zenvara shows a receivable of 77,377 and Palmridge a payable of 75,164. The journal removes 75,164, the amount both agree on. The remaining 2,213 is invoice ZI-1182 in transit (1,836) and a rate difference (377). Posting 77,377 would balance the journal and still hide those two causes inside another line of the group balance sheet. The full walk-through is in [why intercompany balances never agree](/blog/why-intercompany-balances-never-agree/).

One caution on exchange differences. If a balance with a foreign subsidiary leaves the group exposed to the currency, its exchange difference does not disappear on elimination. It stays in consolidated profit or loss, or goes to the [translation reserve](/blog/glossary/translation-reserve/) when the balance is part of the net investment[2](#src-2). Decide that with the group controller before the journal is drafted, not after.

## How should each journal be written up?

Give every journal a short narrative in plain words. It says what is removed, between which two companies, from which source amounts and at which rate, why the amount is the agreed smaller side, and what has been left on the open list. A reader who was not in the close should be able to follow the journal from the narrative alone.

Say also how the journal behaves next month. A balance elimination is rebuilt from the next month's confirmed balances, so it needs no reversal. A one-off journal, such as an accrual for an item in transit, carries a reversal date or is cleared when the other company books its side.

## What support should sit behind each journal?

- The confirmed balances from both companies, by counterparty and in transaction currency.
- The rate table used, with its date and source.
- The open-difference list, showing owner and due date for anything left out.
- For a one-off journal, the agreement or invoice that explains it.
- The date of the journal and the month it belongs to.

Keep it with the month, not in someone's inbox. An auditor's first question is usually “what is this, and what supports it?”, and the answer should take one click.

## How does Finconsol handle this?

Finconsol compares each pair of companies at account level every month, eliminates the smaller side by default and leaves the difference on the intercompany list until it is explained, corrected in a company or adjusted. The elimination is an entry in the group accounts, never in a company's books, and the consolidation worksheet shows the eliminations in their own columns, tied to the statements.

**In Finconsol**[How intercompany works →](https://finconsol.com/intercompany-eliminations/)

******Eliminations, Sep 2026, GBP1 to clear

| Pair | Eliminated | Left on the list |
| --- | --- | --- |
| Zenvara ↔ Fernhollow | 1,240,000 | Agrees |
| Zenvara ↔ Palmridge | 75,164 | 2,213 open |
| Fernhollow ↔ Kestrelwick | 317,500 | Agrees |
| Palmridge ↔ Quillfern | 129,000 | Agrees |
| Services, Zenvara ↔ Palmridge | 81,000 | Agrees |

*The smaller side is eliminated. The 2,213 stays on the list, and in the statements, until it is explained, corrected or adjusted.*

Each elimination is recorded in the change log with its time, and once a month is locked its eliminations cannot be changed. The [close controls page](https://finconsol.com/close-controls/) shows the lock and the log, and the [five-day group close](/blog/five-day-group-close/) says on which day eliminations are made.

## Questions

**Should an elimination journal be reversed next month?**

Balance eliminations are normally rebuilt each month from that month's confirmed balances, so they do not need reversing. A one-off journal, such as an accrual for an item in transit, should carry a reversal date or be cleared when the other company books its side.

**What should the narrative of an elimination journal say?**

It should say what is removed, between which two companies, from which source amounts and at which rate, why the amount is the agreed smaller side, and what has been left on the open list with its owner and date. Written in words, it lets the next reader follow the journal without asking.

**What if the two companies disagree about the balance?**

Do not eliminate the larger figure to make the journal balance. Eliminate the agreed smaller side, put the difference on the open list with an owner and a date, and settle the dispute between the two companies.

**Do elimination journals touch the companies' own books?**

No. They exist at group level only, which is why the companies' ledgers, and their own locked months, stay unchanged. Any correction that belongs in a company's books is made there.

## Sources

## Sources

1. IFRS 10 [Consolidated Financial Statements](https://www.ifrs.org/issued-standards/list-of-standards/ifrs-10-consolidated-financial-statements/), paragraph B86(c).
2. IAS 21 [The Effects of Changes in Foreign Exchange Rates](https://www.ifrs.org/issued-standards/list-of-standards/ias-21-the-effects-of-changes-in-foreign-exchange-rates/), paragraph 45.