The Group Structure of Consolidation Group Europe
In this unit, let's focus on the final test scenario: Direct write-off when the goodwill of consolidation unit DM00 - Denmark, in consolidation groups Europe and World, is negative. Due to SW00 - Switzerland owning 60% of Denmark, we will use the purchase method for this scenario.
The first section of this lesson checks the results for consolidation unit DM00 - Denmark in consolidation group Europe. The second section focuses on the consolidation group World.
Using the Consolidation of Investment Method 10 - Purchase Method (Direct Shares)
Consolidation method 10 - Purchase Method (Direct Shares) is assigned to consolidation unit DM00 in the group structure of consolidation group Europe and World, with the setting Direct Write-off for negative goodwill.
Data Reference for C/I Results
Local Close Data of SW00 - Switzerland in Group Currency EUR
In the figure above, see the local close data of investor SW00 - Switzerland, according to the final scenario. The amount posted to the172100 - Investments in Subs, JV, and Associates GV FS item is now EUR 88 in group currency.
Local Close Data of DM00 - Denmark in Group Currency EUR
See that the local close data of investee DM00 - Denmark does not change in the final scenario.
For the calculation, the amounts of the following FS items will remain the same as in the previous scenarios: 311000 - Issued Capital, 316000 - Retained Earnings Prior Year, 317000 - Net Income FS item (Retained Earnings Current Year) and P&L FS item 799000 - Net Income/Loss.
Consolidation Group EUR: DM00
First Consolidation
The video below explains the derivation of the elimination postings for the first consolidation for consolidation unit DM00 - Denmark in consolidation group Europe.
The figure above explains for consolidation unit DM00 – Denmark in consolidation group Europe, how the elimination postings for the first consolidation are derived.
You will find, that the negative goodwill is posted, i. e. written off on the 516000 – Gain on Bargain Purchase P&L FS item. This triggers the closing of the income statement and the earnings effect.
First Consolidation Task Log
In the Document section of the task log, you can check the elimination postings we set up for the first consolidation from a debit-to-credit perspective.
Subsequent Consolidation & Task Log
The figure above shows the calculation of minorities in FS item 317000 - Retained Earnings Current Year, resulting in the closing of the P&L statement and the earnings effect in the Balance Sheet. This is also reflected in the log.
The Group Structure of Consolidation Group World
The second section of this lesson focuses on consolidation unit DM00 - Denmark in the consolidation group World.
Consolidation Group WORLD: DM00
First Consolidation
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 as well as the calculation of minorities in goodwill for consolidation unit DM00 – Denmark in consolidation group World. Additionally, we explained how the elimination postings are calculated from a business point of view.
First Consolidation Task Log
The Document information in the task log describes the elimination postings we had set up for the first consolidation from a debit-to-credit perspective.
Subsequent Consolidation & Task Log
In consolidation group World, like the subsequent consolidation of consolidation unit DM00 in consolidation group Europe, the profit of this consolidation unit (FS item 317000 - Retained Earnings Current Year) runs into the first subsequent consolidation in period 12 of 2025 and triggers the calculation and posting of minorities but in this group with a group share for minorities of 46 %.
Again, since this is a P&L-relevant activity, the earnings effect is automatically executed.