Explaining Equity Pick-Up

Objectives

After completing this lesson, you will be able to:

  • Outline the equity pick-up idea

Equity Pick-Up

Note
Please consider this lesson optional.

Equity Pick-Up – Key Points

  • Equity pick-up (EPU) is a regulatory requirement in some countries to report standalone financial statements for parent units.

  • With the equity pick-up, you can reevaluate the parent company’s investment to reflect the change in equity.

  • The change of equity after acquisition must be recorded in the parent unit books.

    For example, reported income and movement in reserve (or other comprehensive income (OCI)) attributable to direct subsidiaries must be recorded in the parent unit books.

  • The change of equity after acquisition must also include the pick-up from its own direct children.

    This requires a "step" approach in the calculation of equity pick-up along the ownership hierarchy.

  • In China and Brazil, the equity pick-up is a required step in consolidation process to reevaluate the parent company, then perform elimination.

  • In the United States of America, mainly financial services and certain regulated industries must perform equity pick-up per regulator’s request.

Equity pick-up process flow steps in SAP S/4HANA Finance for group reporting:

  1. Reported financial data is collected (such as G/L data, file upload, mapped/imported data, data collected manually).

  2. Additional data is populated (direct share %, net income calculation, possible adjustment…) up to posting level 10.

  3. Run the equity pick-up calculation. An Excel file is generated to post EPU entries in group reporting.

  4. EPU entries are reversed in group reporting on a different document type since they should not be consolidated (option).

  5. In EPU reports reported data + EPU entries have to be selected. The EPU reversal entries have to be excluded from the selection.

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