Company consolidation

 In Microsoft Dynamics 365 Business Central, when you need to consolidate financial data from 2 companies, it isn't strictly necessary to create a third company solely for the purpose of consolidation. However, doing so is a common practice and recommended in several scenarios for ease of management and to maintain a clear separation between transactional data and consolidated reporting.

Here's how it generally works:

  1. Consolidation Company: You can create a separate company within Business Central that serves as the destination for your consolidated financial statements. This company won't conduct any operational business transactions but will be used solely to compile and review consolidated financial data.

  2. Data Import: Financial data from the individual companies is then imported into this consolidation company. This can be done using Business Central's consolidation functionalities, which allow you to map accounts from each subsidiary to corresponding accounts in the consolidation company.

  3. Adjustments and Eliminations: Typically, intercompany transactions need to be eliminated in consolidation. Having a separate consolidation company makes it easier to handle these adjustments without affecting the transactional data of the operating companies.

  4. Reporting: Consolidated financial statements can be generated within this consolidation company, providing an overview of the financial position and performance of the combined entities.

This setup provides a clear, organized way to manage consolidated financial reporting without mixing operational data from different companies. If you choose not to create a separate consolidation company, the consolidation process can become more complex and may require additional steps to ensure accuracy in your financial reporting.

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