How to distinguish post acquisition profits

Question

Hi Gurus,
We are configuring COI on 7.5 NW.
We have configured and tested first consolidation and that looks fine. However in subsequent periods when the MI is recalculated on the basis of post acqusition profits of the subsidiary, we are a bit unsure as to how to differentiate the profits/ loss of the subsidiary between pre-acqisition and post-acquisition?
Any ideas on this?
Regards
SSC

Answer 1

Hi,
I would do this in 1 of 2 ways.
First is to have 2 sections in your equity accounts, 1 section that is pre-acq equity and 1 that is post. Your balance sheet at acquisition should have all equity in the pre-acq equity accounts, then any subsequent movements will be in the post-acq equity accounts. This is a very clear way of following your pre and post acq equity.
Some people may not like this approach as you have to have more equity accounts in BPC than you may have in your source system. So the second approach is an ownership-based solution:
You should have a consol method that defines an entity when it has just been acquired, and only used in the period of acquisition - for example...80 - Acquired this period, then next period...85 - Fully consolidated.
But because eliminations work on a YTD basis, you will need to use Account Transformations to bring these values from the first month into the next, then a new consol business rule that looks at Ownership method 85 will move amounts to the post-acq destination.
This combined approach will use the normal account selection, but separate numbers (on diff data sources) based on ownership method.
Please let me know if this is not clear and I will explain further.
Tom.