Configuring the Subsequent Consolidation Entries for the Purchase Method

Objectives

After completing this lesson, you will be able to:

  • Configure the non-controlling interest allocation for net income in rule 100

Rule 100: 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.

Rule 100 allocates the non-controlling share of consolidation unit FR00’s net income and current year retained earnings.

  • Debit FS item 792000 (Non-Controlling Interest - Net Income)
  • Credit FS item 321150 (Non-Controlling Interest - Current Year Retained Earnings)

In the Settings tab:

  • Select Periodic reclassification to process the current period values.
  • Select the Periodic Cons frequency (technical key 9 is periodic).
  • Select Consolidation of Investment (C/I) Activity 02 (Subsequent Consolidation) to record the consolidation group’s share of the subsidiary’s net income after acquisition.
  • Select Percentage Complementary: Use the ownership percentage subtracted from 100%. For example, because BE00 owns 75% of FR00, a percentage of 25% is applied.

The remaining tabs in rule 100 are configured as follows:

  • The selection trigger Y-COI-NET-INCOME includes Current Year Retained Earnings (317000). Consequently, the subsidiary’s (FR00) Current Year Retained Earnings (317000) is the trigger value.
  • The Source Item Role, S-NCI-RET-INC-PL, is assigned to FS item 792000. Therefore, 792000 is debited.
  • The subitem for the debit posting is functional area YB99 (Dummy functional area).
  • The Target Attr for Dest is S-NCI-TARGET. The FS item 321150 receives the credit posting because 321150 is the S-NCI-TARGET value for the 317000 trigger FS item.
  • The Z-COI-PERCENTAGE selection object accesses the ownership percentage (75%).

The selection trigger Y-COI-NET-INCOME, is defined as follows:

  • Document types: 00 to 2Z.
  • Consolidation COA: Y1.
  • Financial Statement Item Selection Attribute Elimination: S-COI-NET-INC.
  • Subitem Category: 1

Elimination selection S-COI-NET-INC picks FS item 317000.

The Non-Controlling Interest Target for FS item 317000 is 321150 (Non-Controlling Interest Net Income).

FS item role S-NCI-RET-INC-PL (in Src-dest tab) is assigned to FS item 792000 (Net Income - Non-Controlling Interest).

Create the Subsequent Consolidation Rule

Business Scenario

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

Rule 100 is used to allocate the non-controlling share of consolidation unit FR##’s net income and current year retained earnings.

What skills will you develop in this practice exercise?

Maintain rules for subsequent consolidation.

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