AC660_EN_Col51_FV_Inst_A4 (第11页)

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Field/Data Type Value

250100CommonStock 240100MI-CommonStock

a) Assigningminorityinterestitemstotheequityitems:

Check the current status of the assignments (18 items are already

assigned):

MenuPath: Tools→AcceleratedSAP→Customizing→Execute

Project → SAP Reference IMG → Enterprise Controlling →

Consolidation→ConsolidationFunctions→AutomaticPosting→

Consolidationofinvestments→SelectedItems→Specifyminority

interest items

The Common Stock FS item and 2 investment itemshave not been

assignedacorrespondingminorityinterestitem. ChooseNewentries

and make the following assignments:

Field/DataType Value

250100CommonStock 240100MI-CommonStock

Save.

6. Assigning statistical equity items:

As part of the preparation for postings of subsequent partial or total

divestitures,statisticalequityitemsneedtobeassignedtoallequityitems.

DothisforthesameCommonstockFSitemthatwasaddedintheprevious

exercise.

Continued on next page

328

Field/Data Type	Value
250100CommonStock	240100MI-CommonStock

Field/DataType	Value
250100CommonStock	240100MI-CommonStock

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AC660 Lesson: Consolidation of Investment

Field/Data Type Value

250100CommonStock 950100Stat: CommonStock

a) Assigning the statistical items:

TheCommon Stock FSitemhasnot beenassignedacorresponding

minorityinterestitem. ChooseNewentriesand makethefollowing

assignments:

MenuPath: Tools→AcceleratedSAP→Customizing→Execute

Project → SAP Reference IMG → Enterprise Controlling →

Consolidation→ConsolidationFunctions→AutomaticPosting→

Consolidation of investments→ Selected Items →Specify Equity

itemsandItemsforStatistical Equitypostings

Select New Entries.

Field/Data Type Value

250100 Common Stock 950100 Stat: Common

Stock

Save.

7. DefinethemiscellaneousselecteditemsforC/I:

Field/Data Type Value

Annualnetincomepriortofirstconsolidation 251300

Retainearnings, Methodchange 251900

Clearing: consolidationofinvestments 251700

Subitems 140

Clearing, debits: 120

Equity - divestitures 370100

Clearing, credits: 370100

Acquisitions, equity

Transferstominorityinterestinannualnetincome

Deductions from minority interest in annual net

income

Annual net income 931100

Annualnetincome, offsettingitem 931200

Minorityinterestinannualnetincome 931300

Continued on next page

329

Field/Data Type	Value
250100CommonStock	950100Stat: CommonStock

Field/Data Type	Value
250100 Common Stock	950100 Stat: Common Stock

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Field/Data Type Value

MinorityinterestinANI,offsettingitem 931400

Adjusted annual net income 931500

Minorityinterestinadjustedannualnetincome 931600

Adjust ANI - goodwill 931700

Min.int. in adj. ANI goodwill 931800

Adjusted ANI - equity method 931900

Min.int. inadjANIequitymethod 931950

Overall offsetting item 939000

Hint: Do not specify any items for posting group shares,

divestitures,ornegativeinvestmentbookvalues.

a) DefinethemiscellaneousselecteditemsforC/I:

MenuPath: Tools→AcceleratedSAP→Customizing→Execute

Project → SAP Reference IMG → Enterprise Controlling →

Consolidation→ConsolidationFunctions→AutomaticPosting→

Consolidationofinvestments→SelectedItems→Specifyselected

miscellaneous items

Reviewtheselecteditemsandensurethattheyarethesameaslisted

in the exercises section.

8. Activating thedisplay of statistical items:

Check and make surethat the displayof statistical itemsin documentsis

activated in the global system settings.

-Intheglobalsettings,youspecifiedthattheequitydataispartiallytaken

fromtheadditionalfinancialdataandpartiallyfromthetotalsdatabase. The

additionalfinancialdatahasalreadybeenmaintained.

- Reading the data from the totals database has the advantage of always

accessing current values.

a) Activating the displayof statisticalitems:

Ensure that Display statistical items is selected (Consolidation of

investments section).

MenuPath: Tools→AcceleratedSAP→Customizing→Execute

Project → SAP Reference IMG → Enterprise Controlling →

Consolidation→CheckGlobalSystemSettings

9. Executing theconsolidationof investments:

Continued on next page

330

Field/Data Type	Value
MinorityinterestinANI,offsettingitem Adjusted annual net income Minorityinterestinadjustedannualnetincome Adjust ANI - goodwill Min.int. in adj. ANI goodwill Adjusted ANI - equity method Min.int. inadjANIequitymethod Overall offsetting item	931400 931500 931600 931700 931800 931900 931950 939000

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AC660 Lesson: Consolidation of Investment

Inordertodothis,youneedtospecifywhichitemsaretobereadfromthe

totals database.

You will find these transactions in the following section of the

Implementation Guide:

Consolidation Functions - Automatic Posting – Consolidation of

Investments – Activities – Reported Items for Automatic Activity

Recognition–SpecifyReportedItemsforEquity

Youwanttoreadvaluesfromthedatabaseforthefollowingactivities:

-Firstconsolidation: theitemforcarryingforwardbalances(alltransaction

types)

- Subsequent consolidation: annual net income and currency translation

differences (all transaction types)

-Distributionofdividends: thedistributionitem(alltransactiontypes)

Hint: Specify the set name, keeping the consolidation chart of

accountsand activitynumber in mind.

Field/Data Type Value

Activity 01, First

Consolidation

Set

e.g.: CSxy-zz

(xy=chart of accounts, zz=activity

number)

FS item 251100

Subitem set CS01-6000

Subitems(transactiontypes)

100 through 150

(for subitemcategory 6)

Continued on next page

331

Field/Data Type	Value
Activity 01, First Consolidation Set FS item Subitem set Subitems(transactiontypes)	e.g.: CSxy-zz (xy=chart of accounts, zz=activity number) 251100 CS01-6000 100 through 150 (for subitemcategory 6)

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Field/Data Type Value

Activity 02, Subsequent CSxy-02

Consolidation

RetainedEarningsitem

Set 251200

Currency translation differences 250900 to 250990

item

Activity 18, Distribution of CSxy-02

Dividends

Set 251600

FS item Ret. Earnings, distribution of

dividends

Youcanusethesamesubitem(transactiontype)setforallactivities.

Start task C/I for consolidation group G2 in test mode and analyze the

activities:

What is the amount of the differential from the first consolidation of

consolidation unit C?

WhatamountispostedtoCatitem950100“StatisticalCommonStock”?

WhatistheamountoftheamortizationofthegoodwillofBinC?

Whatamountsarepostedduringthesubsequent consolidationofCtothe

statistical items “Annual net income - total” and “Annual net income -

minority interest”?

Start task C/I for consolidation group G1 in test mode and analyze the

activities:

What is the amount of the differential from the first consolidation of

consolidationunitC?Comparethiswiththeresultforconsolidationgroup

G2. Whyisno documentposted withparent B?

HowdoestheamortizationofthegoodwillofBinCwithingroupG1differ

from that in group G2?

a) Executing theconsolidationofinvestments:

Create the reported equity items:

Menu Path: Tools→AcceleratedSAP →Customizing →Eecute

Project → SAP Reference IMG → Enterprise Controlling →

Consolidation → Consolidation Functions → Automatic Posting

Continued on next page

332

Field/Data Type	Value
Activity 02, Subsequent Consolidation RetainedEarningsitem Set Currency translation differences item Activity 18, Distribution of Dividends Set FS item	CSxy-02 251200 250900 to 250990 CSxy-02 251600 Ret. Earnings, distribution of dividends

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AC660 Lesson: Consolidation of Investment

→ Consolidation of investments → Activities → Reported Items

for Automatic Activity Recognition → Specify reported items for

changes in equity

Select New Entries.

Field/Data Type Value

Activity01,FirstConsolidation e.g.: CSxy-zz (xy=chart

of accounts, zz=activity

number)

Set 251100

Go to Set maintenance

Item CS01-6000

Save set maintenance.

Subitemset(setalreadydefined)

Subitems(Transactiontypes) 100 through 150(for

subitemcategory6)

Activity 02, Subsequent Csxy-02

Consolidation

Set 251200

Go to Set maintenance

Retained Earningsitem

Currencytranslationdifferencesitem 250900to250990

SaveSet maintenance.

Subitem set CS01-6000

Activity 18, Distribution of Csxy-18

Dividends

Set 251600

Go to Set maintenance

FS item Ret. Earnings, distribution

of dividends

Save set maintenance.

Subitem set CS01-6000

Continued on next page

333

Field/Data Type	Value
Activity01,FirstConsolidation Set Go to Set maintenance Item Save set maintenance. Subitemset(setalreadydefined) Subitems(Transactiontypes) Activity 02, Subsequent Consolidation Set Go to Set maintenance Retained Earningsitem Currencytranslationdifferencesitem SaveSet maintenance. Subitem set Activity 18, Distribution of Dividends Set Go to Set maintenance FS item Save set maintenance. Subitem set	e.g.: CSxy-zz (xy=chart of accounts, zz=activity number) 251100 CS01-6000 100 through 150(for subitemcategory6) Csxy-02 251200 250900to250990 CS01-6000 Csxy-18 251600 Ret. Earnings, distribution of dividends CS01-6000

Field/Data Type

Value

Activity01,FirstConsolidation Set Go to Set maintenance Item Save set maintenance. Subitemset(setalreadydefined) Subitems(Transactiontypes) Activity 02, Subsequent Consolidation Set Go to Set maintenance Retained Earningsitem Currencytranslationdifferencesitem SaveSet maintenance. Subitem set Activity 18, Distribution of Dividends Set Go to Set maintenance FS item Save set maintenance. Subitem set

e.g.: CSxy-zz (xy=chart of accounts, zz=activity number) 251100 CS01-6000 100 through 150(for subitemcategory6) Csxy-02 251200 250900to250990 CS01-6000 Csxy-18 251600 Ret. Earnings, distribution of dividends CS01-6000

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Save.

Hint: You can use the same subitem (transaction type) set

for all activities.

Go to the consolidation monitor and execute the equity task for

consolidation group G2.

MenuPath: Accounting→EnterpriseControlling→Consolidation

→ Consolidation → Monitor

PlacecursoratintersectionofTaskC/IandG2. SelectTestrun.

The amount of the differential from the first consolidation of

consolidation unit C is 400.

Item 950100 Stat: CommonStock is 600.

TheamortizationofthegoodwillofBinCequals20.

This is calculated as follows:

Thedifferentialof400fromthefirstconsolidationisamortizedover

5yearsattheamountof80peryear. Theconsolidationfrequencyis

quarterly; thus, theamount of 20isamortized.

Theamountof200ispostedtoitem931100Annualnetincome-total;

80ispostedtoitem931300Annualnetincome-minorityshare.

NowplacecursoratintersectionofTaskC/IandG1. SelectTestrun.

The amount of the differential from the first consolidation for

consolidationunitCwithinconsolidationgroupG1is500.

TheamountforCinconsolidationgroupG2: 400.

NodocumentispostedforparentBinG1becausethedocumentposted

in G2 also applies to G1, and because the first consolidation using

direct shares is identical.

The amortizationof thegoodwill of B inCwithin group G1 differs

from that in group G2 as follows:

A minority share of 20% (group share of B=80%) is posted to the

amortizationof 20 alreadyposted in G2.

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AC660 Lesson: Consolidation of Investment

Lesson Summary

You should now be able to:

• Compare simultaneous consolidation, step consolidation, and stepwise

simultaneous consolidation

• DescribeConsolidationofInvestmentsutilization

• Use the consolidation of investmentsmethod

• Explain method assignment for simultaneous consolidation and step

consolidation

• Describetheautomatic consolidationactivities

• Describetwowaystoconveytheconsolidationofinvestmentsactivitiesto

the system

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Lesson: Customizing Settings

Lesson Duration: 50 Minutes

272

Lesson Overview

The focus of this lesson is to help you understand the purpose and use of

customizingsettings. Youwilllearnaboutthepostingprocessforappropriation

of retained earnings. You will also examine how to distribute dividends and

bonus payments.

Lesson Objectives

After completingthislesson, you will beable to:

• Explain the customizing settings to enable automatic consolidation of

investments postings

• Discussthepostingprocessforappropriationofretainedearnings

• Describe how dividends and bonus payments are distributed in the

customizingofselecteditemsforconsolidationofinvestments

Explain the steps to automatically generate a posting. Bring out the fact that

specialpostingsto theappropriation ofretainedearningsareonly generatedin

somecases. Discussthepostingforamortizationofgoodwillandstepacquisition.

Business Example

Thegroup,G1,planstointroducethecomponentSAPConsolidationbytheend

ofthisyear. Youarerequiredtodeterminethecustomizingsettingsrequiredto

enable automatic postings.

Purchase Method

Customizing Settings (Purchase Method)

Explain the steps for automatically generating a posting that are listed in the

section. Begin with the consolidation of investments method and explain the

steps in a clockwise direction.

Explain the necessity of statistical financial statement items for divestitures,

partialdivestitures, andchangesinindirect holdings.

Minority Interest

Explain the required assignments for minority interests. No assignment of

investment itemsisrequiredunderUS-GAAP/IAS.

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AC660 Lesson: Customizing Settings

The system uses the direct share or group share to automatically generate the

amountoftheminorityinterestsandrearrangesthemamongtheassignedfinancial

statement items.

ReturntothedisplayoftheTaccount insection“First Consolidation(A→B:

80%)”. Aseparateminorityinterestwasassignedtoequityitem1forthisposting.

Incontrast,equityitems2and3refertoadifferentposting,butthesameminority

interest.

Appropriation of Retained Earnings

Eachequityitemmustbeassignedaappropriationitem. Explainthealternatives

(credit/debitdifferentiation,1:1,n:1)forboththegroupandtheminorityinterest.

Postingsintheappropriation of retainedearningsare dependent on thetypeof

appropriationof retained earnings(balancesheet or income statement) andthe

activeindicatorintheutilizationofconsolidationofinvestments.

AppropriationofRetainedEarnings–PostingProcess

Specialpostingstotheappropriationofretainedearningsareonlygeneratedinthe

following cases:

1. Appropriation of retained earnings in the balance sheet → Partial

divestiture/total divestiture

2. Appropriationofretainedearningsintheincomestatement→Subsequent

consolidation

3. Appropriation of retained earnings in the income statement → Partial

divestiture/total divestiture

Posting of Statistical Equity

Emphasizesthattheassignmenttothestatisticalfinancialstatementitemsmustbe

definedona1:1basis! Thestatisticalpostinglinesaredisplayedincustomizing

through menuitemMaster data –Globaldefinitions. Field: Display statistical

financial statement items.

You can use the “First consolidation” folio again as an example, which also

emphasizesthe1:1assignmentofthestatisticalequityitems.

Distribution of Dividends, Bonus Payments

Thebackgroundofthesefinancialstatementitemsisexplainedinthenotes. You

should not go into more detail at this point, as this subject is the topic of the

separate Consolidation of investments course.

Elimination of Investment Income

Determinewhether toshowthisfolioinorderto showtherelationship between

eliminationofinvestmentincomeanddistributionofdividendswiththenextfolio.

Distribution of Dividends

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

This folio explains the system in a one-level group. In a multi-level group,

additionalminoritypostingsarecreatedduringthedistributionofdividends.

Other Selected Items (1 + 2)

Brieflyoutlinethenecessityofthelistedfinancialstatementitems,astheyappear

in the list. Do not go into any detail here, as thismaterial isthe subject of the

special Consolidation of Investments course.

For informationonthefinancial statementitemfor applyingminorityinterests

totheannualnetincome,refertothesubsequentconsolidationinthenextfolio,

posting II.

Thestatisticalfinancialstatementitemsforannualnetincomearealsorequired

forthesubsequentconsolidation,seepostingIIIofthenext.

Nowshowfoliosonadditionalactivitiesassupportedinthesystem:

• Subsequent Consolidation

• Amortization of Goodwill

• Step Acquisition

Explainhowasubsequentconsolidationisperformed. InSAPConsolidation,this

isseparatedintoamortizationofgoodwill,calculationofminorityinterests,and

distributionofdividendsasseparateactivities(thesewereoneactivityinFI-LC).

Explainthedisplayedpostingrecord. ForpostingsIIandIII,refertotheexisting

financialstatementitemsintheotherselectedfinancialstatementitems.

Explainthepostingforamortizationofgoodwill. ForpostingII,referagainto

thesettingintheotherselectedfinancialstatementitems.

Thecourseexamplepostsquarterly,whichmeans10USDispostedeachquarter.

Pleasenotethatanannualpostingisshownintheexampleforclarity’ssake.

Explain the posting for step acquisition.

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AC660 Lesson: Customizing Settings

Figure 87: Customizing Settings (Purchase Method)

Toenableautomaticpostings,thefollowingCustomizingsettingsarerequired:

• Definition of a consolidation of investments method, such as items and

calculation of acquisitions.

• Assignmentofminorityinterestitemstotheequityitems. HGBalsorequires

minorityinterestitemsfortheinvestmentitems.

• Assignmentofappropriationofretainedearningsitemstotheequityitems

for the group and minority interest shares.

• Assignmentofstatisticalequityitemstotheequityitems.

• Distributionofdividenditemsandbonuspaymentitems.

• Definition of further statistical items

• Asintheotherconsolidationsteps,youneedtodefineoneormoretasksfor

consolidationofinvestmentsandassignthemtotheconsolidationmonitor.

For each task youdetermine, which accounting techniquesand activities

are to apply.

• Postingrequiresadocumenttypewithpostinglevel30ingroupcurrency.

Figure 88: Minority Interest

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Amongtheselecteditems,eachequityitemisassignedaminorityinterestitemin

the balance sheet. This can be 1:1 or n:1.

If you want an equity aging schedule, the minority interest items require a

breakdown category with transaction types.

These settings ensure that external shares are automatically transferred to the

minority interest itemswithin thebalance sheet.

Figure 89: Appropriation of Retained Earnings

Aprerequisiteforautomaticpostingstoappropriationofretainedearningsisthe

selectionoftheAppropriationofretainedearningsflaginC/Iutilization.

An appropriations item is assigned to each equity item for the group share

depending on whether appropriations are disclosed in the balance sheet or the

incomestatement. Thiscanbe1:1orn:1andcanbedistinguishedbetweendebits

and credits.

Anappropriationoftheretainedearningsitemfortheminorityshareisassignedto

each equity item. Thiscan also be 1:1 or n:1.

Thepostingsdependonwhethertheappropriationsaredisclosedinthebalance

sheetorattheendoftheincomestatement. Youdeterminethisinthemasterdata

for the consolidation chart of accounts.

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AC660 Lesson: Customizing Settings

Figure90: AppropriationofRetainedEarnings-PostingProcess

Thepostingsfortheactivitiessubsequentconsolidation(onlywhenappropriations

inincomestatementaremade)anddivestituretakeplacewithintheappropriation

of retained earnings.

No postings are needed for activities such as first consolidation and step

acquisition.

Subsequent consolidation:

• Ifretainedearningsareshowninthebalancesheet,thesystemassumes

that the changes in equity were entered at the appropriations items. No

special logic is required.

• Ifretainedearningsareshownintheincomestatement, thebalanceof

theequityitemisusedasthetrigger. Theminorityshareof thebalanceis

transferredfromthegroupappropriationitemtotheminorityappropriation

item. ThisiswhyitisimportantthatinCustomizing,youexplicitlydefine

the balance sheet item. * entriesare invalid.

Divestitures:

• If retained earnings are shown in the balance sheet, the divestiture

processcomputesthechangetotheequityitem(360inthe). Becauseequity

items are involved, the system also computes the minority share that is

incurredduringthedivestiture(60). Thedeltatothetriggeringequityitem

is also posted to this appropriation of retained earnings item (which is,

360-60=300)sothatthisagainresultsinavalueof360. Theoffsettingentry

ispostedtotheC/Iclearingitemdefinedintheotherselecteditems.

• Ifretainedearningsareshownintheincomestatement,thedivestiture

computes the change to the equity item and posts this amount to the

group/minority appropriation items.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Figure 91: Posting of Statistical Equity

Tobeabletoautomaticallypostsubsequentdivestitures, simultaneouspostings

must be made to statistical items.

Each stockholder’s equity item, including the translation differences, must be

assigneditsownstatisticalitemforthis. Itmustbea1:1assignment.

Theitemsrequireabreakdowncategorythatcorrespondstothebreakdownsof

therespectiveequityitem,suchastransactiontypesfortheequityschedule,and

that of the partner.

Figure 92: Distribution of Dividends, Bonus Payments

YoudefineoneormoreitemsforthedistributionofdividendsinCustomizingof

selected items for C/I.

Thisisanappropriationitem,brokendownbythetransactiontype,subitems,if

you require an equity aging schedule.

The item is needed for the correct calculation of the minority share in annual

netincomeandthegain/lossfrompartial/totaldivestitures. Forthisreason,itis

essentialthatonlydividenddistributionsbepostedtothisitem.

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AC660 Lesson: Customizing Settings

MakesureyoudonotspecifytheDistributionofdividendsclearingitemdefined

in the document type for the elimination of investment income. There is a

correlationwiththeeliminationofinvestmentincome.

YoualsodefinetheitemsforbonuspaymentsinCustomizingofselecteditems.

Theseareappropriationitemsbrokendownbytransactiontypes,whenrequired.

• Bonus paymentsare distributions to the management of a company and

donotaffect netincome. Asopposedtodividends, bonuspaymentsneed

not be eliminated.

• The item is needed for the correct calculation of the gain/loss from

partial/total divestitures. Asaresult, ensurethat only bonuspaymentsbe

posted to this item.

• When a partial or total divestiture occurs, all revenues/expenses minus

any distribution of dividends and bonus payments are summed up and

proportionally/fully inverted.

Figure 93: Elimination of Investment Income

The investment income of the consolidation unit, A, is eliminated against the

distributionattheconsolidationunit,B,(seeentryI).Thisusestheitemsspecified

in the method for the elimination of investment income. In this example, the

entryisone-sided,whichmeansthattheamountoftheinvestmentincomeisthe

determiningfactor. Theamountof 30 representsminority interest andremains

on the distribution item.

Clearingentriesaremadetoensurethatthebalancesheetattheconsolidationunit

levelalsobalancesout. Youspecifytheitemfor thisentryunder thedocument

typefortheeliminationofinvestmentincome-chart-basedcharacteristics.

Afinancialstatementbalancingentryisautomaticallyposted.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Figure 94: Distribution of Dividends

Aftertheeliminationofinvestmentincome,theminorityshareofthedistribution

of dividends must be reclassified if the group share of the distributing

consolidationunit islessthan100%. ThisisdoneinaseparateC/Iactivityfor

dividend distributions.

Customizingneedstoknowtheitemsthatcontainthedividenddistributionstobe

abletoreclassifytheamountstillremainingonthedistributionofdividendsitem.

• Appropriation of retained earnings

– Annual netincomepriortofirst consolidation

– ...

– Transferstominorityinterestinannualnetincome

– Deductionsfromminorityinterestinannualnetincome

• ...

• Statistical items

– Annual net income

– Annual net income, offsetting item

– Minority interest in annual net income

– Minority interest in ANI, offsetting item

– Adjusted annual net income

– Minorityinterest inadjustedannual netincome

– Overall offsetting item

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AC660 Lesson: Customizing Settings

Furtherstatisticalitemsarerequiredforannualnetincome.

• The items, Annual net income and Minority share in annual net income,

are needed for reporting purposes.

• Theitem,Adjustedannualnetincome,istheannualnetincomeminusthe

dividendsandbonuspaymentsdistributedwithintheconsolidationgroup.

Theitemisneededtocomputethegain/lossfrompartial/totaldivestitures.

• Theitemsdonotrequireabreakdowncategory,andaredefinedpreferablyin

the range of numbers starting with9.

• Items for Group Shares

– Group share

– ...

– Group share in annual net income

• Divestiture

– Item for loss

– Item for gain

– Item for loss - minority share

– Item for gain - minority share

– Clearing itemfor divestiturepreparation

Further, you need to specify items for group shares. These items provide

informationaboutthestructureofthecorporategroupforreportingpurposes. To

displaythisinformation,youneedtorunthegroupsharesreport.

For subsequent divestitures, you define gain and loss items for the group and

minority shares, respectively.

TheitemClearingfordivestiturepreparationisusedinthefunction,Preparation

forchangestoconsolidationgroups. Thisensurestheaccuratedisclosureofthe

balancesheet,incomestatement,andagingschedulesduringfirstconsolidations

and total divestitures. The item is used for zero balances for each transaction

currency.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Figure 95: Automatic Entries at the Click of a Button

Thisexamplesummarizessomeofthenecessaryconfigurationstepsforautomatic

posting:

1. Specifyingreporteditemstoenablethesystemtolocatethedatarequired.

2. Specifying selected items for automatic postings during the run of

Consolidation of Investment program.

Figure 96: Subsequent Consolidation

Assumethat thecurrent year saw aprofit of 200.

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AC660 Lesson: Customizing Settings

Subsequent consolidation reclassifies the minority interest according to the

externalshareof40monetaryunits. Inthebalancesheet,theminorityinterestis

transferred to the minority interest item.

Theminoritysharesarealsoadjustedintheincomestatement(seeII).Theitemfor

transferstotheminorityshareintheannualnetincomeintheincomestatementis

definedinCustomizingunderOtherselected items.

The statistical itemsfor annual net income are updatedseparately for thetotal

annualnetincome,theadjustedannualnetincome,andtheminorityshare. These

itemsarealsodefinedinCustomizingunderOtherselecteditems.

Figure 97: Goodwill Amortization

Theautomaticpostingofgoodwillamortizationrequiresthefollowingsettings:

• In global settings or method definition, you define a goodwill item

(acquisitionandaccumulatedamortization),anamortizationexpenseitem,

andtheamortizationcharacteristics(lifeinyears).

• Thefinancialstatementimbalanceisautomaticallycalculatedandpostedin

thebalancesheetandtheincomestatementtotheitemsthataredefinedin

IMGunderFinancialstatementitems-Selecteditemsforposting.

• Thesubsidiaryentrytostatisticalitemsisalsoautomatic. Itusesthesame

items as in subsequent consolidation. These items need to be posted to

accommodate future total/partial divestitures.

The amortization entryoccursat the parent (A).

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Minorityinterest entries inthebalancesheet, incomestatement, andstatistical

itemsarepostedexactlywhentheC/Imethodusesdirectsharesandtheparent’s

group share is less than 100%.

Note: Thetrainingsystemissetupforquarterlyconsolidations. Thisis

whytheannualamortizationof40USDisdividedinto10USDperquarter.

Figure 98: Step Acquisition

ThisexampleassumesthatBacquiresanadditional20%ofcommon

StepAcquisition

stockofCfor240monetaryunits. TheequityatBconsistsofcommonstockof

1,000unitsandprioryearretainedearningsof200units.

Theinvestmentisclearedandtheminorityshareisadjustedby20%. Inthiscase,

no goodwillis incurredbytheparent companyB.

Intheareaof statisticalitems, theequity itemsareadjustedbytheamount that

iseliminatedagainsttheparent’sinvestment. ThisispostedattheCsubsidiary,

showingparent,B,asthepartnerunit. Theoffsetispostedtotheoverallstatistical

offsetting item.

Demonstration: Interunit Elimination in the

Consolidation Monitor

Purpose

Todemonstrateinteruniteliminationintheconsolidationmonitor

System Data

System:

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AC660 Lesson: Customizing Settings

Client:

UserID:

Password:

Setupinstructions:

1. Show the FS chart of accounts and specifically point out the financial

statement items that are relevant for the consolidation of investments

(investment, equity, statistical financial statement items). Point out the

“number symmetry”, that is:

1. Equity item xxyyyyy corresponds to

2. Minority interest 24yyyyy

3. Whichcorrespondstostatisticalfinancialstatementitems95yyyyy.

Demonstratetheentryoftheadditionalfinancialdata(repetitionfromunit

entry)throughthedatamonitor. Positionthecursorontheconsolidationunit

andpressthe“Activity”pushbuttontoenterthedata.

Explainthetasks(thesystemonlyhasone, but youcouldcreatedifferent

tasks for combinations of accounting techniques and activities) and

documenttypesinvolvedintheconsolidationofinvestments. Pointoutthe

relationship to the definitions in the global settings. The global settings

determinehowthedocumenttypesshouldbeassigned(eithertotasksorto

activities/accounting techniques).

Returntotheoptionofreadingtheequityfromthetotalsdatabaseandthe

additionalfinancialdata. Beforeconsolidationofinvestmentscanbestarted,

you have to define which financial statement items should be read from

the totals database. This is done within Activities → Reported items for

automaticactivitydetermination→Definereporteditemsforequity. The

settingsforPPhavealreadybeendefinedfortheexercise.

Note: Entries exist here in the standard system. In practice, the

customers have to reduce these to the activities and financial

statementitemsthathavetobereadfromthetotalsdatabase.

These entries have been deleted for the exercise, since the participants

wouldotherwisehavetodealwiththesubjectof“additionalfinancialdata”

at this point.

Sets have been defined for the activities first consolidation, subsequent

consolidationanddistributionofdividendsforthesubsequentconsolidation

activity. Theseactivitiescontainthefinancialstatementitemsbalancecarry

forward,annualnetincome,currencytranslationdifferences,anddividends.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Make the entries for consolidation of investments in the consolidation

monitor and explain the first and subsequent consolidation. Explain the

relationshiptocustomizingwhenyouexplaintheautomaticallygenerated

posting.

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AC660 Lesson: Customizing Settings

Facilitated Discussion

Todiscussthecustomizingsettimgsnecessaryforenablingautomaticpostings

Discussion Questions

Usethefollowingquestionstoengagetheparticipantsinthediscussion.Feelfree

to use your own additional questions.

Discussthecustomizingsettingsnecessaryforenablingautomaticpostings.

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Lesson Summary

You should now be able to:

• Explain the customizing settings to enable automatic consolidation of

investments postings

• Discussthepostingprocessforappropriationofretainedearnings

• Describe how dividends and bonus payments are distributed in the

customizingofselecteditemsforconsolidationofinvestments

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AC660 Lesson: Sequence of Activities

Lesson: Sequence of Activities

Lesson Duration: 30 Minutes

284

Lesson Overview

Thislessonwillcoverinformationaboutactivityinterpretationinaconsolidation

group. Youwillalsolearnaboutconsistentconsolidationlogic.

Lesson Objectives

After completingthislesson, youwillbeable to:

• Explainactivityinterpretationinaconsolidationgroup

• Describe the consolidation logic in SAP

Outlinethefactthattheusercanspecifyasequenceforcertainactivities. Describe

theproceduretocalculatetheoverallsequence. Examinedefaultsequenceand

autosequence. ExplainthedifferencebetweenGCCandUSGAAP/IAS.

Business Example

The group G1 plans to introduce the SAP Consolidation by the end of this

year. You are required to define the sequence of activities to customize SAP

Consolidation.

Default and Auto Sequence

Emphasizethattheusercanspecifyasequenceforcertainactivities(thedefault

sequence). Explaintheprocedureforcalculatingtheoverallsequence. Mention

theoptionsformanualsortinganddemonstratetheminthesystem.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Figure 99: Sequence of Activities (Default Sequence)

Thisexampleshowsthefunctionsofactivitysequencing. Thesequencenumbers

oftheactivitiescorrespondtotheonesintheSAPsystem.

Thedataoftheexampleisenteredasactivitiesintheabovesequence. Thisleads

to an investment structure with an implicit sequence of consolidation units (A

→ B → C → D).

Atthispoint,youcandefineadefaultsequenceofactivitiesinCustomizing,based

ononeconsolidationunit. Theadditionalflag(uptohere)controlsthemeshing

oftheactivitiesofdifferentconsolidationunits: Inthefirstrun,alltheactivities

up to the flagged activity (step acquisition in this example) are processed.

After this, theactivitiesofthenext consolidationunitareprocessed. Next, the

remainingactivities(partialdivestiture,totaldivestitureinthisexample)ofthe

first consolidation unit are processed.

Figure 100: Sequence of Activities (Auto Sequence)

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AC660 Lesson: Sequence of Activities

The left column lists the original sequence of all the activities of the period,

whichisdeterminedbydataentry. Togetherwiththeactivitiesfromalltheprior

periods(none inthisexample), it showsthechangesin investmentsandforms

the investment structure.

Thesequenceofthesecondcolumnisdeterminedbythedefinitionofadefault

sequenceinCustomizing. Thesequenceisdeterminedforeachconsolidationunit.

Inthisexample,theactivitysubsequentconsolidation(02),isplacedinfrontof

stepacquisition(07),andpartialdivestiture(10)infrontoftotaldivestiture(11).

Theoverallsequenceistheresultofthemixingoftheinvestmentstructureinthe

leftcolumnwiththesequenceforeachconsolidationunitinthecentercolumn.

Eachofthehierarchylevelsareprocessedfromtoptobottom.

• In every hierarchy level, each of the consolidation units are processed in

alphabeticsequence. Foreachunit,alltheactivitiesareprocesseduptoand

including the Up to here threshold.

• Next, all the activities following theUp to here threshold are added, the

sequenceof theconsolidationunitsbeingreversed.

• You can also create a manual sequence:

– IfyoumoveordeletetheUptoherethresholdamongtheactivitiesof

eachconsolidationunit(afterwardsautomaticsequenceasdescribed)

– Ifyoumanipulatetheautomaticallyderivedglobalsequenceusingthe

select and move functions for activities (this is done under Global

sequence)

Demonstration: Customizing Settings

Purpose

Todemonstratethecustomizingsettingsinthesystem

System Data

System:

Client:

UserID:

Password:

Setupinstructions:

1. Showthecustomizingsettingsinthesystembysuccessivelyshowingthe

IMG activities section.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Activities Interpretation

Individualactivitiesmaybeinterpreteddifferentlyinthedifferentconsolidation

groups; explain the examples in the section “Activity Interpretation in a

Consolidation Group”.

Thesection“ConsistentConsolidationLogic”concludesthetopicandemphasizes

its complexity.

Thenexplainthepossibilitiesofcreatingananalysisofstockholders’equitywith

the Report Painter.

Because questions frequently arise on the differences between GCC –

US-GAAP/IAS,thefollowingsectionshavebeencreatedasanoverview:

First Consolidation –GCCvs. US-GAAP/IAS /

SubsequentConsolidation–GCCvs. US-GAAP/IAS

Demonstratetheindicator“Calculateacquisitions”withdirectshare(corresponds

to US-GAAP/IAS) andgroup share(correspondsto GCC) intheconsolidation

of investments method.

Figure101: ActivityInterpretationinaConsolidationGroup

Theactivitiesreportedtotheoverallconsolidationgroup-fromitspointofview-

needtobere-interpretedforeachsub-group. However,differentC/Imethodsmay

beapplied-evenifthesameactivitiesareinterpreted.

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AC660 Lesson: Sequence of Activities

Figure 102: Consistent Consolidation Logic

Thecharacteristicsof consolidationof investmentsare:

• High complexity of individual activities, such as method changes,

divestitures, and transfers.

• Strong interrelation between all activities: The semantics of individual

activitiescannotbeviewedandimplementedasastandaloneactivity.

SAPdeliversaconsistentconsolidationlogicacrossallactivities.

Figure 103: Report Painter: Stockholders’Equity Analysis

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Exampleofauser-definedanalysisoftheuseofstockholders’equity:

• Eliminationduringactivitiessimilartofirstconsolidation

• Remaininggroupequityfromsubsequentconsolidation

• Equity transferred to minority interest

Thecomparisonbetweentheinvestmentandtheeliminatedequityexplainsthe

acquisition value of goodwill.

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AC660 Lesson: Sequence of Activities

Facilitated Discussion

To discuss activity sequencing

Discussion Questions

Usethefollowingquestionstoengagetheparticipantsinthediscussion.Feelfree

to use your own additional questions.

Discuss activity sequencing.

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Lesson Summary

You should now be able to:

• Explainactivityinterpretationinaconsolidationgroup

• Describe the consolidation logic in SAP

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AC660 Lesson: Equity Method

Lesson: Equity Method

Lesson Duration: 50 Minutes

290

Lesson Overview

Thislessonwillprovideanoverviewoftheequitymethod. Youwilllearnabout

the treatment of the amortization of goodwill, the first consolidation, and the

subsequent consolidation in theequity method. In addition, you will learn the

differences between the German HGB and the US GAAP/IAS for both first

consolidation and subsequent consolidation.

Lesson Objectives

After completingthislesson, youwillbeable to:

• Explain the equity method

• Describesubsequentconsolidationinequitymethod

• Compare between HGB and US GAAP/IAS for first and subsequent

consolidation

Explain the economic background of the equity method. Provide information

aboutthepostingforequityfirstconsolidationandsubsequentconsolidation.

Equity Method

Thisfolioexplainstheeconomicbackgroundoftheequitymethodwiththetwo

possibleexpressionsbookvaluemethod(one-lineconsolidation)andproportion

ofequitymethod(two-lineconsolidation). IntheSAPsystem,thissettingismade

throughthegoodwillfinancialstatementitemthatisdefinedinthemethodorin

theglobal settings. Inone-line consolidation, theinvestmentitemwasdefined

asthegoodwillfinancialstatementitem. Incontrast,thetwo-lineconsolidation

showsaseparategoodwillinaseparatefinancialstatementitem.

FirstConsolidationforConsolidationUnitE(EquityMethod)

Explainthepostingforequityfirstconsolidationbasedontheexampleandthe

notes.

Amortization of Goodwill (Equity Method)

Explainthepostingforsubsequentconsolidation(here: amortization) basedon

the example.

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Unit5: InterunitElimination&ConsolidationofInvestments AC660

Customizing Settings (Equity Method, Subsequent Consolidation.) The

possiblescopesoffinancialdatahaveto bedefinedfirstincustomizingforthe

equitymethod. Sixdifferentscopesaredefinedinthestandardsystem.

• Comparison of theC/I AccountingTechniques

• Mutual Stock Method (First Consolidation)

• MutualStockMethod(Subsequent Consolidation)

• Mutual Stock versus Equity Method

After the above graphics, which emphasize the purchase method, explain the

other consolidation methods. These graphics serve to round out the possible

consolidation of investments methods.

Showacomparisonofthemutual stockandequitymethods. Emphasizewhich

sharesandfinancialstatementitemsareincludedineachbalancesheetandhow

theapportionmentisperformed. Makesuretopointouthowminorityinterests

are handled.

Explainthepostingprocessforthemutualstockmethodandcompareitwiththe

process for the equity method.

Business Example

Thegroup,G1,planstointroducetheSAPConsolidationbytheendofthisyear.

Youarerequiredtoconsolidateinvestmentsusingequitymethodandcustomize

the treatment of differentials.

First Consolidation

Figure 104: Equity Method

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AC660 Lesson: Equity Method

For the equity method,

• You supply the parent’s investment (changes in investments) and the

subsidiary’sequity(additionalfinancialdataortotalsdatabase).

• Forthesubsequentconsolidation,yousupplytheequityholdingsadjustments

eitherusingtheequityholdingsadjustmentdataasapartoftheadditional

financialdataorthroughthechangesinequitydata. Inthelastcase,noother

datamustbesupplied. Theonlydatastillneededarethereporteditemsthat

are taken from the reported equity data.

• Thesystemautomaticallycalculatesthedifferential,whichmeanstheexcess

investment over equity or vice-versa.

InMethodDefinitionofCustomizing,youspecifyhowthedifferentialisdisclosed:

• One-lineconsolidation(bookvalue method)

– Goodwill is not separately disclosed. Instead, it is a part of the

investmentbookvalue(equityinearningsofaffiliates). Theinvestment

and goodwill are oneandthesameitem.

– NoticethataccordingtotheGermanHGB,goodwillmustbeseparately

disclosed in the notes to financial statements. To do this, you can

createaseparatesubitem, suchas135 Additionstogoodwill, equity

method, and specify the subitem in the method for the Acquisitions

goodwill item.

• Two-lineconsolidation(proportionofequitymethod)

– Goodwillisdisclosedseparately,asinthepurchasemethod:

– Create an item for the investment book value and another item for

goodwill.

Figure 105: FirstConsolidation forUnit E(EquityMethod)

363