How can the impact of intercompany purchases and sales be offset?

The impact of intercompany purchases and sales can effectively be offset by posting journals to an elimination subsidiary. This practice is instrumental in consolidating financial statements where intercompany transactions are present. An elimination subsidiary acts as a mechanism to remove the effects of these transactions from the consolidated financial results, ensuring that revenues and expenses are not overstated.

When intercompany transactions occur, both sides of the transaction are reflected in the financial statements of the respective subsidiaries. Without an elimination process, the consolidated results would inaccurately portray financial performance due to double-counting.

By posting elimination journals, you can adjust the entries associated with the intercompany transactions effectively, reflecting true performance and maintaining accuracy in the financial reporting process. This step is crucial in maintaining clean and transparent monetary documentation across the entire organization comprising multiple subsidiaries.

The other options might address different aspects of intercompany transactions but do not serve the purpose of fully offsetting the impact of intercompany purchases and sales in the most efficient way as required for accurate consolidation.