Using the Equity Method to Check the Consolidation of Investment Postings for Consolidation Unit CAN00 in Consolidation Group WORLD

Let's review the results of theextraordinary amortization of positive goodwill for the consolidation group World. Associated consolidation unit CAN00 - Canada is consolidated into consolídation group World with the equity method, according to a direct share of 35 % of investor USA00 - United States in investee CAN00 - Canada.  

The video below explains the derivation of the elimination postings for the first consolidation for consolidation unit CAN00 - Canada in consolidation group World. 

Summary: In this video, we explain the elimination postings when Canada is consolidated into consolidation group World. 

Due to using the Extraordinary Amortization setting, the positive goodwill automatically posts to the asset FS item171000 - Invest at Equity. We use the same elimination logic for the consolidation group World and America.  

Since the goodwill posting occurred on the 171000 - Invest at Equity asset FS item, no minorities are triggered. In the Document section, see the elimination postings set up for the first consolidation from a debit-to-credit perspective.  

On the first of December 2025, an investor bought Consolidation unit CAN00. Canada then generated profit for December. This profit generation occurs since, in the Group Structure settings, we did not select First Consolidation at the End of Period.  

The internal part of the 317000 - Retained Earnings Current Year FS item containing CAN00's profit belongs to consolidation group America and increases the equity value. 

According to consolidation group World, 20% of this internal profit belongs to minorities. Since both elimination postings are P&L-relevant, the earnings effect is automatically triggered for both postings.  

The task log of the subsequent consolidation shows the internal part of the net income of consolidation unit CAN00 - Canada, the calculated minorities for the consolidation group World, and the Closing P& L & Earnings Effect in the Balance Sheet from a debit-to-credit perspective.  

To trigger a debit posting on the 711000 - Share of EM P&L FS item, post the goodwill reduction manually on statistical FS item $GW_IMP. 

As the offsetting item in the manual impairment posting, use the statistical dummy content FS item $000000OFF or your own statistical FS item.

Use document type 36 for the impairment posting for the Extraordinary Amortization of positive goodwill scenario. According to the impairment test, post the goodwill reduction to statistical FS item $GW_IMP. $GW_IMP is the trigger FS item from which the calculations begin.  

To complete the posting, assign activity type 03 - Amortization of Goodwill, consolidation unit CAN00, and partner unit USA00 to the G/L Line Item row, containing the posting for FS item $GW_IMP.  

No activity type or partner unit is required for the $000000OFF offset FS item.  

When the posting is saved, execute the 2101 - Cons. Of Invest (Act.-Based) task again. 

After re-executing the 2101 - Cons. of Invest (Act.-Based) task, the protocol contains the same results of the first and subsequent consolidation as shown at the beginning of this lesson.  

In addition, the task log contains the section Amortization of goodwill.  

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

The reduction of goodwill leads to a debit posting in the P&L. This triggers the earnings effect.  

Since we are in consolidation group World, 20% of the goodwill reduction refers to minorities, which increases the profit in the P&L statement and triggers the Closing P&L & Earnings Effect in the Balance Sheet.  

The figure below shows the automatically derived debit-to-credit postings and the posted data sets in the ACDOCU table.