Using the Purchase Method to Check the Consolidation of Investment Postings for Consolidation Unit DM00 in Consolidation Group EUR

In this unit, we will focus on executing the 2101 - Consolidation Of Investment (Activity-Based) task in the consolidation monitor and explaining the elimination results.   

In this lesson, we will check the results for the consolidation group Europe. Consolidation unit DM00 - Denmark is consolidated into group Europe with the Purchase Method. We use the purchase method since the ownership percentage of investor SW00 - Switzerland in investee DM00 - Denmark is 60%.  

After executing the2101 - Consolidation Of Investments (Activity-Based) task, the posting of goodwill to investee DM00 - Denmark is positive. 

Consolidation method 10 - Purchase method (Direct Shares) is assigned to consolidation unitDM00 in the group structure of group Europe. Consolidation method 10 - Purchase method (Direct Shares) has the setting Direct Elimination for positive goodwill.  

In this lesson, we will look at the local close data in group currency EUR to easily follow the calculation of the elimination results.  

For the following calculation, note the investment of EUR 1650 of the investor SW00 - Switzerland, posted on the 172100 – Investments in subs. JV and associates, GV FS item.

For the calculation, note the investee DM00 - Denmark, the 311000 - Issued Capital and 316000 - Retained Earnings (prior year) equity items, the 317000 - Net Income FS item (the Retained Earnings Current Year), and the 799000 - Net Income/Loss P&L FS item. 

The calculations of the first and subsequent consolidation occur in the consolidation monitor with the help of the Activity-based C/I task 2101 - Consolidation Of Investments (Activity-Based). 

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

In this video, we covered how to calculate goodwill, and how the elimination postings are calculated from a business point of view. 

Referring to the First Consolidation section of the task log for consolidation unit DM00 - Denmark, the task log contains the Investment and Equity information. It also includes the Differential information, otherwise known as the Goodwill information. See how the results split into Total, ConsGroup, and Minority Interest. 

The Document information in the task log describes the Elimination Posting Record and the Reclassification Posting Record we set up for the first consolidation. This is shown from a debit-to-credit perspective.

On the first of December 2025, an investor bought the Consolidation unit DM00. Consequently, the consolidation unit generates profit since we did not select First Consolidation at the End of the Period in the Group Structure settings.

As a consequence FS Item 317000 - Retained Earnings contains this profit of 60 euros. This profit runs into the first subsequent consolidation in period 12 of 2025 and triggers the calculation of 24 euros as a posting of minorities. Since this is a P&L-relevant activity, the earnings effect automatically executes. 

The task log of the subsequent consolidation shows the internal and external part of the net income of consolidation unit DM00 - Denmark. It also shows the Elimination Posting Record and the Closing P&L and Earnings Effect in the Balance Sheet from a debit-to-credit perspective.  

After executing the 2101 - Cons. Of Invest. (Act.-Based) task, you must manually post the activation of goodwill using the Post Group Journal Entries app. The figure below explains how to set up such a posting on the level of consolidation group EUR. 

After the manual transfer posting, the 163100 - Goodwillasset FS item (the goodwill) activates.