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Unit 4: Consolidations and Eliminations

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Unit 4: Consolidations and Eliminations

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s4hanasd 1809
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2/1/2020 SAP e-book

Unit 4: Consolidations and Eliminations

Figure 186: Purchase Method Result Summary

The above figure is an example of the result we expect for SW00 and FR00. The current year
retained earnings are eliminated during subsequent consolidation.

Calculations
● Goodwill: Investment of 150,000 + .75 x (Common Stock of – 68,090 + Prior Year
Retained Earnings(PYRE) of - 41,640). This represents the premium paid.
● Non-Controlling Interest (NCI): (100% minus group share of 75%) x (Common Stock of –
68,090 + Prior Year Retained Earnings of - 41,640). This represents the equity value not
owned by the group.

Figure 187: Purchase Method Sequence Summary

Since we are using several sequences to perform calculations, the figure above summarizes
the settings.

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2/1/2020 SAP e-book

Lesson: Configuring the Rule Based Purchase Method

Purchase Method - Configuration Settings

● Post to partner unit: sequence 20 is configured to post to the partner because it is using
the investment trigger (from the parent) but is posting to the partner.
● Percentage complementary: sequence 40 and 60 are complementary because they are
booking to NCI ... which is the complementary 25% (100–75).
● Activity / Acc Technique of Partner:
- Sequence 10 and 20 are set to yes because both the parent and subsidiary could have
investment values.
- Sequence 30 to 60 are set to no because we do not want to eliminate the equity of the
parent.
● Source account : sequence 20 is the only one that is not booking to the trigger fs item.
● Trigger : these are the source fs items.
● Percentage :
- Sequence 10 and 20 are using 100% since the investment is eliminated in its entirety.
- Sequence 30 to 60 are using 75% since they all deal with equity items:
■ Sequence 30 and 50 are booking entries based on the controlling share of 75%.
■ Sequence 40 and 60 are booking entries based on the non-controlling share of 25%
(since they are set to use the complementary ownership percentage, it is 25%).

Figure 188: Purchase Method Postings by Sequence

The example above is intended to demonstrate how to trace back to method sequences if
needed for debug and to provide transparency for ease of understanding. It isn’t intended for
end users or for normal reporting.

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