Configuring Subsequent Consolidation for the Equity Method

Objectives

After completing this lesson, you will be able to:

  • Configure the non-controlling interest allocation for net income in rule 600

Rule 600: Non-controlling Interest Allocation for Net Income

Now that you have configured the rules for first consolidation, you need to add a rule for the subsequent consolidation. As previously mentioned, subsequent consolidation allocates the non-controlling interest of the subsidiary’s net income.

Rule 600 allocates the non-controlling interest for consolidation unit CA00’s net income to Investment at Equity. There is an offsetting entry to Share of Profit for Equity Subsidiaries.

  • Debit FS item 171000 (Investment at Equity)
  • Credit FS item 711000 (Share of Profit for Equity Subsidiaries)

In the Settings tab:

  1. Select Periodic reclassification to process the current period values.
  2. Select the periodic (9) Cons Frequency.
  3. Select Post to triggering unit (default).
  4. Select C/I Activity 02 (Subsequent Consolidation).
  5. Select Accounting Technique 4 (Equity Method).

The remaining tabs in rule 600 are configured as follows:

  • The trigger selection object Z-ME-NET-INC picks the current year retained earnings (317000) of the subsidiary (CA00).
  • The Source Item Role, S-A-INV-AT-EQUITY, is assigned to FS item 171000. Therefore, FS item 171000 is debited (assuming current year retained earnings are negative).
  • The subitem for the debit posting is subitem 901 (Incoming Units).
  • The Source Item Role, S-P-SHARE-EM, is assigned to FS item 711000. Therefore, FS item 711000 is credited.
  • The subitem for the credit posting is functional area YB99 (Dummy functional area).
  • The Z-COI-PERCENTAGE selection object accesses the ownership percentage of 35%. As a result, 35% of the current year retained earnings is posted.

Configure the Non-controlling Interest Allocation for Net Income

Business Scenario

At ABC Corporation, you need to add a rule to your reclassification method for subsequent consolidation in the equity scenario:

Rule 600 allocates the group share for the subsidiary's current period net income

What skills will you develop in this practice exercise?

Maintain rules for subsequent consolidation.

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