INTERCOMPANY Meaning and
Definition
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Intercompany refers to transactions, relationships, or activities that occur between two or more entities belonging to the same parent company or under common ownership. It relates to the internal operations and interactions within a larger corporate structure.
In the context of accounting and finance, intercompany transactions involve the buying, selling, or exchange of goods, services, or assets between these affiliated companies. These transactions are treated differently from regular external transactions and are typically subject to special accounting and reporting guidelines. For instance, intercompany sales and purchases must be eliminated in consolidated financial statements to avoid double counting and to present a true picture of the parent company's financial position.
Intercompany relationships and activities also extend beyond financial transactions. They can involve the sharing of resources, knowledge, or expertise between subsidiaries or divisions within the same corporate group. Such collaborations may include centralization of services like human resources, marketing, or technology support to achieve economies of scale and improve efficiency.
Additionally, intercompany agreements and contracts are legal documents that govern the terms and conditions of these internal transactions. These agreements explicitly outline the responsibilities, obligations, and rights of each affiliated entity, ensuring clarity and transparency in the intercompany dealings.
Overall, intercompany activities reflect the interconnectedness and complexity of a multinational corporation's internal operations, as well as the need for proper accounting, financial reporting, and coordination amongst its entities.
Common Misspellings for INTERCOMPANY
Etymology of INTERCOMPANY
The word "intercompany" is derived from two root words: "inter-" and "company".
1. "Inter-": This prefix originates from Latin and means "between" or "among". It is commonly used to denote interaction, mutual involvement, or interconnectedness.
2. "Company": This word comes from the Old French term "compagnie" which itself traces back to the Late Latin word "companio". "Com-" means "with" or "together", while "-panio" is related to the Latin word "panis" meaning "bread". Therefore, "company" essentially refers to a group of individuals who share bread together, symbolizing companionship or association.
Combining these roots, "intercompany" signifies activities, transactions, or relationships that take place between, among, or involving different companies or businesses.
Idioms with the word INTERCOMPANY
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Intercompany transaction
An intercompany transaction refers to a financial transaction that takes place between two or more entities within the same company group or organization. These transactions involve the transfer of goods, services, or funds between subsidiaries, divisions, or branches of the same company. Intercompany transactions are commonly used for various purposes such as centralizing financial management, allocating costs, sharing resources, or consolidating financial statements.
Similar spelling words for INTERCOMPANY
- in theory,
- interconnect,
- interferon,
- interchurch,
- intercalate,
- intercalary,
- Intercessor,
- interceptor,
- intercommunion,
- interchange,
- intercourse,
- intercostal,
- intercalation,
- intercom,
- intermarry.
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