Comprehending Consolidation of Investment Postings for Consolidation Group World and Executing an Impairment Posting

This lesson focuses on the Purchase method scenario with extraordinary amortization of positive goodwill and calculation of goodwill in local currency.

We will explain the elimination results, the currency translation results on the goodwill as well as the influence of minorities on these results for consolidation unit DM00 - Denmark, which is consolidated into consolidation group World in this lesson.

Next to this, we will also check the results for consolidation unit SW00 – Switzerland in this lesson.

After that, an impairment posting is executed for investee DM00 – Denmark and investee SW00 – Switzerland in consolidation group World, and the posting results are explained.

When you execute the 2101 Cons. Of Invest (Act.-Based) task in the consolidation monitor, you will find, that next to the first and first subsequent consolidation a currency translation of goodwill is executed for investees DM00 – Denmark and SW00 – Switzerland in consolidation group World.

The video below explains the derivation of the elimination postings for the first consolidation for consolidation unit DM00 - Denmark in consolidation group World.  

Summary: In this video, we covered how to calculate goodwill, the currency translation of goodwill in local currency, and how the elimination postings are calculated from a business point of view.  

See how you get the same posting results as for consolidation group Europe.  

The figure above gives insight into the first consolidation protocol and shows the goodwill in group and local currency.  

Executing the 2101 Cons. of Invest (Act.-Based) task triggers the execution of the currency translation of goodwill (Step 3A). 

Executing the 2101 Cons. of Invest (Act.-Based) task triggers the calculation of the currency translation difference of goodwill, as shown in the figure above.  

Since we are in consolidation group World, the system accounts for the minorities of 10% in the currency translation difference (an equity FS item), as seen in the postings.  

In the figure above, you can compare the Currency Translation of Goodwill postings from the debit-to-credit perspective with the posting document in the task log.  

In consolidation group World, like group Europe, the consolidation unit DM00's profit (FS item 317000 Retained Earnings Current Year) runs into the first subsequent consolidation in period 12 of 2025. This profit generation triggers the calculation and posting of minorities, with a group share for minorities in equity FS items of 46%.    

Again, since this is a P&L-relevant activity, the earnings effect automatically executes.  

The task log displays the posting document for the subsequent consolidation of consolidation unit DM00 in group World.  

The video below explains the derivation of the elimination postings for the first consolidation for consolidation unit SW00 - Switzerland in consolidation group World.  

Summary: In this video, we covered how to calculate goodwill, the currency translation of goodwill in local currency, and how the elimination postings are calculated from a business point of view.  

The task log of the first consolidation, including the goodwill in local and global currency, is shown in the figure above.  

Executing the 2101 Cons. of Invest (Act.-Based) task runs the calculation of the currency translation difference of the goodwill of investee SW00 - Switzerland, as shown in the figure above.  

The figure above shows the first subsequent consolidation results of consolidation unit SW00 in consolidation group World.  

After an impairment test an impairment posting is executed for investee DM00 – Denmark in consolidation group World. This reduces the goodwill.

Next to the impairment test and posting for consolidation unit DM00 – Denmark in consolidation group World, an impairment test and posting for consolidation unit SW00 – Switzerland in consolidation group World has to be posted too.

After saving the impairment postings, the 2101 - Cons. Of Invest (Act.-Based) task needs to be executed again.

After re-executing the 2101 - Cons. of Invest (Act.-Based) task, the protocol contains the results of the first and subsequent consolidation, as shown in the first lesson of this unit. Additionally, the task log contains the section Amortization of goodwill.

Let's check the amortization of goodwill results for consolidation unit DM00 - Denmark in consolidation group World.  

The figure below explains which postings the statistical FS item $GW_IMP triggers after executing the 2101 - Cons. Of Invest (Act.-Based) task.

The reduction of goodwill triggers an expense in the P&L statement, which triggers the earnings effect. The system calculates these postings in group currency and the local currency DKK of the investee DM00 - Denmark. Since we are in consolidation group World, 10% of the goodwill reduction belongs to minorities. You can see this in the posting logic.  

The figure above shows the Amortization of Goodwill postings of investee DM00 - Denmark in the Document section of the task log. The data set development of the Amortization of Goodwill is visible in the ACDOCU table.  

After re-executing the 2101 - Cons. of Invest (Act.-Based) task, the protocol contains the results of the first and subsequent consolidation, as shown in the first lesson of this unit. Additionally, the task log contains the section Amortization of goodwill.   

Let's finish this lesson by checking the amortization of goodwill results for consolidation unit SW00 - Switzerland in consolidation group World. 

The figure above explains which postings the statistical FS item $GW_IMP triggers after executing the 2101 - Cons. Of Invest (Act.-Based) task.  

The reduction of goodwill triggers an expense in the P&L statement, which triggers the earnings effect. The system calculates these postings in group currency and the local currency CHF of the investee SW00 - Switzerland

The figure above shows the Amortization of Goodwill postings from a debit-to-credit perspective and the relevant document in the task log. The data set development of the Amortization of Goodwill is visible in the ACDOCU table.