Equity Method

Following is my question.
There are 3 company in example A,B,C
A has 20% stake in B , C and accounting both by equity method only.
Does B,C trial balance and accounts need to be fully maintained in the BCS or is it sufficient to add the journal entry for the results in the books of A?

Thanks Dan.
1. The period of divesture has to be maintained in 'Combination of Consolidation Units' right?
2. When the consolidation unit is divested fully, the ECC will account for profit /loss of sale of unit by reversing the entry right. So eventhough the BCS can still distinguish by Equity method and will have least impact if accounts are closed or not.. the ECC guys if they close it , the balance will vanish right/
Just checking the approach..

Similar Messages

First conso with Equity method and LDT

Hi Gurus,
I have to perform a first consolidation with legacy data transfer for a Company consolidated at Equity.
This company (Let's say company A), at the date of first conso in SEM-BCS, has accumulated some Retained Earnings. Company A is owned by company B.
Company A :
Capital : -100
RE : -20
Accumulated RE : -50
Companty B :
Historical Investment : 120
If I look to the SAP doc and perform the fisrt conso in the system, BCS will only adjust the investment with the GW entry I make in the AFD. That's it.
But I also need to have an adjustement of the investment with the accumulated RE (which is in fact the Equity method postings of the prior periods that were done out of BCS) !!
NB : Equity Holding adjustments are read from RFD.
How the system can perform this historical adjustment ? Why is the system not able to do the same as for Purchase with legacy data transfer ?
many thanks for your help
regards,
Thibaud

Hi all,
Has anyone experienced this topic ?
Your help would be appreciated
Regards,
Thibaud

Balance carryforward consolidation unit with equity method

Hi experts,
One question in relation with balance carryforward in SEM BCS 4.0. Do Additional finantial data of Consolidation unit with equity method must be carried forward to following periods?
I have a problem with AFD validation for equity method.
Best regards,
Beatriz B.

Thanks Halim,
I am not using consolidation unit combination. It is only Legal Consolidataion. However, I have fixed the problem by changing the master data of consolidation unit. I have enabled FCEP.
I have one more question. Do I have to run Consolidation Group Change Task also when I am switching from Equity method to Purchase method for Associate companies?
When I am changing from Equity to Purchase method all the previous C/I postings are reversed, but the profit of Associates which was already accounted by holding company in the previous period is transfered to Net Income-Method Change and second effect is given to Goodwill (GW is enhanced).
Hence, post change of method, when I upload TB of Associate, the Net Income is not eliminated to the extent of the profit Adjusted on account of Method change.
Please suggest,
Thanks,
USR

Goodwill for Equity Method

Hi All,
Could you please give me any suggestion how I config first consolidation for consolidation unit that use equity method because after run COI task (in UCMON), system record Goodwill account and decrease investment account (amount same that we input in additional financial data) but we no need this record.
Thanks in advance.

Hi,
I need your help on the following :-
I have setup the consolidation method to directly eliminate the goodwill calculated to an offsetting FS item 124905, both in the positive elimination of goodwill and negative elimination of goodwill.
However when i execute the consolidation of investments, although the system correctly calculating the goodwill, i cannot see the way how it eliminates the goodwill by posting offsetting posting to the 124905 FS item. Under the document node of the consolidation of investments results i cannot see this FS item 124905 anywhere.
May i know where can i see the offsetting posting of the goodwill?
Thanks.

Journal for Equity Method

P owns 30% of S1. (using equity method)
Investment = 30.000 USD
Equity of S1 = 25.000 USD
S1 owns 70% of S2. (using purchase method)
Investment cost = 50.000 USD
Equity of S2 = 30.000
What is the journal of first consolidation in group S1 and group P?

I believe it should be as follow , right?
Cons group S1:
investment -50
equity +30
goodwill +10
minority interest liability -10
Anyway, thanks for your clarification. I also think in the same way. But my system provide wrong journal entry. It provides as follow for Cons group S1 :
Equity 30
MI equity -30
and there is no journal entry for cons group P.
Do you have any clue on this?
Thanks.

16a equity method,the investment is loss the positon came to zero

Hi,experts
We have trouble when our investment is came to zero,with equity method.
In China GAAP ,The real business backgroud is our investment is equity method,not cost
method.
every year we will get the corporation 's profit or loss .And we shall
count it decrease or increase at our hold percent.
If we investment 10000,and the company
profit 1000 ,our holding is 20% the we will increase our positon by 200
If loss ,then we decrease 200 position.
Use tpm12,we shall see the position now is 10000 +- 200.
We can't use sell and buy because there is not real sell or buy happend
and no bank pay or received at all.
We use FWZZ add the condition set up by our consultant just as bonus condition type.
and the position change category should be different (1005),
if the reduse amount is not as the position,there is not problem.
But when it is reduce the same amount as the position .Errors cames out.
When saved it .There will be no flow came out at all.
SAP SUPPORT TOLD :you need to use FTR_CREATE and a flow like se2000 sell it to finish the business.
Did you know the more standard mehthod of euqity method yearly euqity increase ore decrease?
Thanks and best regards.

Not exactly sure what is being accomplished, but your problem lies with the setData method (as stated by the trace).
When calling the method, you are doing myUse.setData(21, c) or myUse.setData(248, c). In both cases, you are passing two arguments (21 and c or 248 and c). However, the method setData() in the UseDataClass is not setup to accept any arguements. You need to do one of the following:
1) if you want to use the two numbers being passed, you need to change the method to be something like:
//up top:
myUse.setData(21,c);
//within the UseDataClass class:
setData(int a, int b)
//then do whatever you want to with the a and b...for instance:
t = a;
co = b;
//now t =21 and co = c
2) if you don't want to use any of the numbers being passed, then don't pass them:
//up top:
myUse.setData();
//you can just leave the setData() method alone since it is already setup to work without arguements
3) If you want to switch between the two methods (ie - sometimes pass arguements and sometimes not), you can create another method like the one in the first example.
here's what I mean:
class UseDataClass
public void setData()
//do what ever you want here without worrying about any values...
public void setData(int a, int b)
//now use the a and b values...
You could then do either:
myUse.setData();
or
myUse.setData(21, c);

First Consolidation purchase method subsequent consoli.. in Equity method

I have a scenario where the business wants to eliminate investments and equity postings. So investment should be offset against equity.(like in Purchase method). After the client also wants the Net income from the investee to be rolled into parent .(like in equity method offset against investment and offset to a P&L account.). Can some body give me a suggestion how to configure this kind of situation.Is this scenario reasonable.
Also all subs are 100% owned.So no minority or goodwill activities are taking place. Any help is appreciated.
Thanks.
Sanjay

The earnings of the subsidiaries is automatically included in the cons group results.
However, I have seen this request on more than one occasion and have dealt with it differently depending on the reason for this requirement.
For determining the value of a parent, including investment in subs, the best approach IMHO is to create a separate cons group hierarchy exactly the same as the legal or standard hierarchy, with different group names (we used the first letter L for each group in the legal hierarchy and first letter E for each group in the "equity" hierarchy). In the equity hierarchy each unit is assigned the equity method except for the parent company of each group. Then COI is executed for this hierarchy. In the equity hierarchy, all the earnings is posted to the parent. Reports may be written for this hierarchy to achieve the required results.

Equity method - First cons

There is a requirement that
as per local GAAP , units following equity method
( non consolidated units ) , should identify ( not post )
the goodwill / negative Goodwill which arise out of First
consolidation. as notes to Financial statements.
However during subsequent cons I can post equity holding
adjustments to this investment.
But the problem is system is posting the euity adjustments
as susbsequent consolidation.
So , I want to avoid the First consolidation , but still
be able to post subsequent consolidation.
Please share with me any best posiible way out.

we used the statistical investment and equity items in AFD.
If we use statistical items , then system does First
consolidation. It will not post any document in FC.
However equity adjustments postings will happen as per the
investment account given in equity method postings.

I/U Elim with Equity Method

Dear BCS SDNers,
I have an issue regarding I/U Eliminations with Equity method companies.
If I remember correctly in my other projects (I am not able to check it now), the system is supposed to look at the accounting techniques to determine if it has to post or not the I/U Elimination.
Example :
A transaction involving Company 1 (Purchase method) with Partner 2 (Equity method) must not be included in the elimination process. Thus, the system is enough intelligent to skip this transaction.
Do you agree with me ?
If it is true, I have an issue, because it is not working in my case : it tries to eliminate this transaction... Did I forget something ?
I have re-checked everything, including SAP notes and the BCS doc, but I don't find...
Thanks in advance for your help.
Regards,
Thibaud

Hi Dan,
Your answer is very relevant.
But I still have a small doubt....
When I look to SAP documentation, there is nothing about that !
Anyway, thanks for your help.
I'll maybe ask SAP for a confirmation
Regards,
Thibaud

COI Equity method...

Have scenario where A is has invested in 45% in B. It is consolidated under equity method. But both are group companies in the SAP instance and both company financial data is brought to BCS cube
when I read the equity statement rule following is mentioned in help.sap.com
If an investee unit is consolidated using the equity method, then its individual financial statement data is not included in the consolidated financial statements
Does this means that we should not consolidated B in the consolidated financial statement and ignore it in reporting? But company B is also the same SAP system..?
What is the step to be followed in consolidation in this regard...
Help /Answers appreciated..

Hi Venkat,
If we are talking about associated companies (equity method), not about joint ventures (proprtional method), then it's really one-line consolidation.
You don't need all FS from the associated company. And very often one simply doesn't have it.
Actually, there is one entry that should be done in each period for equity method accounted companies:
Group's or mother company entries:
Dr Investments in associated companies
Cr Share of profit from associated companies.
In BCS you may do it in two ways:
1. Handle associated companies as a part of the group, entering for those companies only equity item amounts that trigger automatic recalculation of the Group's net profit (consequitive consolidation).
2. Do not have those companies in the Group's hierarchy, do not maintain any data input from them. Just make a manual entry I mentioned earlier. In this case you do not need equity method settings. Everything is done manually. Sometimes it's preferred method. You put into the system the figures really provided by the associate, not calculated amount that may not be equal to those figures provided by associate later.

Equity Method Questions!!

I would like to generate an accurate u201Cprofit/loss on valuation of equity method applicable stocksu201D following equity increase/decrease of equity method company.
Example
Holding Entity, u201CHEu201D that would like to generate consolidated financial statements, has 40% stock of equity method company, u201CEq001u201D. The book value of the 40% stock is 200,000.
When invested initially, the stock holderu2019s equity at u201CEq001u201D was 400,000 and the current yearu2019s net income is 15,500.
Questions
1.How should u201Cownershipu201D of equity method company configured?
A.PCON=100%, POWN=40%, PMIN=60%
B.PCON=40%, POWN=40%, PMIN=0%
2.Is the balance sheet amount of equity method company to be uploaded (1) the closing balance or (2) the increase/decrease in the current year?
3.Which process is a better choice between (1) setting u201CDestination Equity Accountu201D from consolidation business rules or (2) setting an extra business rule regarding equity method?
Test Results
After setting PCON 100% & 40% at ownership application, closing balance at 415,550, and current period net income of 15,500, the test results are as follows;
[http://louis111.woweb.net/TestResult.xls]
Thanks.
Regards,
Louis

For automated equity method acounting (not proportional) it is necessary to correctly configure consolidation of investments (hint: execute COI check setting program to determine any inconsistencies).
Once COI is configured it is necessary in the master data to assign the equity method to those cons unit where it is to be applied. These master data settings are time dependent and should be assigned accordingly.

3EC_CS_1A ECCS Consolidation DataSource does not extract Equity Method

In note 370048/588176 - Difference between database list and group reports.
For Posting level "00" The note says "Not included are Equity method or
Mutual stock method"(Tcode - CXM1).
In the ECC system they have a way to turn this function off to report on this Equity method consolidation units. Is there a work around for the BW extraction as well to extract the equity method consolidation units into BW?
Has anyone created Generic extractors on the ECMCT table?
Best Regards, Gargi

Posting the message again!

Equity Method Consolidation

Dear All,
How to define equity method consolidation rules in BPC 7.5 as per Indian GAAP.
Regards,
Kalpik

Thanks Halim,
I am not using consolidation unit combination. It is only Legal Consolidataion. However, I have fixed the problem by changing the master data of consolidation unit. I have enabled FCEP.
I have one more question. Do I have to run Consolidation Group Change Task also when I am switching from Equity method to Purchase method for Associate companies?
When I am changing from Equity to Purchase method all the previous C/I postings are reversed, but the profit of Associates which was already accounted by holding company in the previous period is transfered to Net Income-Method Change and second effect is given to Goodwill (GW is enhanced).
Hence, post change of method, when I upload TB of Associate, the Net Income is not eliminated to the extent of the profit Adjusted on account of Method change.
Please suggest,
Thanks,
USR

No consolidation, Equity Method

Hi Guru:
What is the accouting technique in BCS COI 'No consolidation, Equity Method' mean? Is it same as equity method?
Thanks.
Eric

yes, it is the same as equity method.
i think that "no consolidation, equity method" is an error message when you do data entry for COI ? is it right?
if yes, then it means no consolidation method (such as equity method) that are assigned to accounting technique.
If you're already assign the method, but the error still exist, please let me know.
Hope it can help.

Equity method issue

Hi everyone,
I notice that during the consolidation, the Equity method eliminates data on the OPENING flow only up to the value of the same account for the last period of the prior year.
For instance, if my "property, plant and equipment account" is equal to 10,000 USD for F_CLO of 2008.DEC,
the consolidation will eliminate 10,000 USD on the F_OPE flow every month of 2009.
If there is an increase of the account in 2009.JAN (2,000 USD), after carrying forward, the F_OPE of 2009.FEB will be equal to 12,000 USD. After consolidation, the F_OPE, will be equal to 2,000 USD when I expect to be 0.
Do you know if there is any setting to force the system to eliminate the F_OPE based on the prior period and not only based on the last period of the prior year?
Thanks in advance.
Antoine Epinette

Hi Dan,
Your answer is very relevant.
But I still have a small doubt....
When I look to SAP documentation, there is nothing about that !
Anyway, thanks for your help.
I'll maybe ask SAP for a confirmation
Regards,
Thibaud

Equity Method

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