BOFC-Procedure to Liqudate the reporting unit

[Former Member]

Hi Friends,

I am stuck in the quarter closing for consolidated reserve.

we want to liquidate a reporting unit. so, for this quarter we planned to close the books of that reporting unit.

We have not given any data under closing flow, but explained the numbers in the other flows.

(Closing flow kept empty) - this is effecting the consolidated reserve account.

I need to know how to input the data for the Investment account and for capital account.

Can you Please help me on this as soon as possible, because i have been trying for this from 2 weeks, now I have reached nearby my deadline & have to submit my solution by the end of the day tomorrow.

Thanks in Advance!

Regards,

Anitha

[Marc_Kuipers · Accepted solution]

Hello Anitha

Normally, you control incoming and outgoing units in the Scope (not in package or category)

You define the ownership at opening and closing. So, your unit would be 100% consolidated at opening, and 0% at closing

See settings in scope below

Thanks

Marc

[Former Member · Accepted solution]

Hi Marc,

Thanks for your reply

I have tried doing as above. I cant not see the reporting unit in the reports.

If I do this, elimination in Investment accounts are not happening.

Actually, we wanted to deconsolidate  next period 2016  and so we want to close the books this period. we want to know how to input the data this period in the books of liquidating unit.

I feel scope setting can be doe next period 2016.

What to do for this period? how to input date in the liquidate unit?

For all remaining accounts elimination is happening but there is huge amount in the consolidated reserve. how to do this?

Please help me on this.

Thanks in advance!

Anitha

[olivier_gentile]

Hello Anitha,

A liquidation leads the subsidiary to exit the consolidation scope and should be therefore not consolidated at closing as Mark explained. The scope outgoing behaviour of the subsidiary will trigger automatic entries needed for exiting entities (for example, reversal of eliminations).

However if this liquidation happens at the end of September 2015 you should also declare an intermediate data entry period (2015.09) in the incoming/outgoing tab of the subsidiary. This will allow the system to keep the flows you inputed in the September package.

In 2016 the subsidiary won't show at all in your scope as it closed down previous year.

The large amounts you see in the consolidated reserve are related to local shareholder's equity of the subsidiary, central manual entries booked on subsidiary reserve or impact of investment elimination of owner company ?

Regards,

Olivier

[Former Member]

Hi Olivier,

Can you Please give me more clear idea on the lines you mentioned as -

?

"However if this liquidation happens at the end of September 2015 you should also declare an intermediate data entry period (2015.09) in the incoming/outgoing tab of the subsidiary. This will allow the system to keep the flows you inputed in the September package.

In 2016 the subsidiary won't show at all in your scope as it closed down previous year".

Central manual journals are booked on Subsidiary but not to the consolidated reserve.

Anitha

[Former Member]

Hi Olivier,

So u mean we have to input the data as usual in the package for this period(2015.09) and make the changes in the scope for next period 2016?

Please correct me if I am wrong in my understanding.

Can you please explain me with an example or with a screenshot (how package to be inputted, how settings to be made and so on Procedure for deconsolidation) ?

Thanks!

Anitha

[olivier_gentile]

Dear Anitha,

If your entity leave the consolidation scope at the end of September 2015 either because it is deconsolidated, sold or liquidated, then it should be flagged as an "outgoing during the period" company in the scope in order to trigger various automatic entries carried out by category builder (like reversal of closing flow) or rules (like reversal of eliminations). You may have to post additional manual central entries to fully handle the process (like consolidated gain/loss on sale of investment in case of entity disposal).

September package should be inputed normally until the effective date of liquidation (for example, if your entity stops to be consolidated at September, 20th then you should input package flows until this date including local closing balance). Additionally, you need to declare a specific conversion rate at the date of disposal if your entity reports in foreign currency and is leaving the scope before September, 30th.

In 2015.09 scope you need to flag the entity as outgoing with an intermediate data entry period equals to 2015.09 to tell the system to load the content of 2015.09 package in your consolidation. You will do the same thing in your December scope for your December consolidation : this will force the reload of 2015.09 package in December too, allowing to have the exiting photo at the date of liquidation in your year-end consolidaiton.

In 2016 scopes, the entity won't be displayed at all. Indeed, if the company is not consolidated at closing in December 2015 scope, and 2015.12 scope is used as your opening scope for 2016, the system won't load the rates and method related to this entity as it has already left the group the year before.

Make sure to book the investment liquidation in the parent company package too (no investment with the liquidated subsidiary should remain at closing).

Please find below the scope screenshots related to the declaration of an entity as outgoing during the period.

Regards,

Olivier

[Former Member]

Hi Oliver,

Thanks for your reply.

Please correct me if i m wrong in my below understanding:

So our reporting unit will be closed down in 2016 period, then till December we need to enter the data normally in the packages.

In 2016, we need to make changes in the scope as you mentioned above and assign to the 2016 consolidation definition and that reporting unit will not appear in the reports.

Right?

Anitha

[olivier_gentile]

Dear Anitha,

You mentioned in your original post that "we want to liquidate a reporting unit. so, for  this quarter we planned to close the books of that reporting unit".

Giving that we are near the end of October, I assumed you were talking about closing down your entity for September 2015 reporting.

If it is the case, and I may have incorrectly understood your situation, then your entity will be closed in 2015 (not in 2016). This means that for your September and December consolidations you will account for P&L and Balance Sheet figures until the liquidation date which occurred somewhere during Q3 2015 if you do quarterly reporting (or in September if you do monthly reporting).

The September package will contain year-to-date amounts of your liquidated entity until the liquidation date. No package will be generated for this entity in December (and October and November if you do monthly reporting) as it is liquidated by the end of September. By specifying in December scope that the intermediate data entry period is 2015.09, the system will load 2015.09 package data in December consolidation.

In 2016 no more package to generate for this entity. And if your 2016 scopes are using 2015.12 scope as opening, the entity won't be loaded in the scope, as it is not consolidated at opening. Therefore you will have nothing to do with your 2016 scopes. When an entity is not included in a given scope, no data shows at all in reports.

Regards,

Olivier

[Former Member]

Hi Olivier,

Can you Please tell me how the package of the subsidiary (liquidating) unit have to be booked for the accounts of share capital and in Investment account.

Note: There are no data for September period to give at closing flow(balance sheet) as the Reporting unit is no more from the 30th of September. The unit has run for 9 months and will be recorded in P&L account(there is data for P&L)

Anitha.

[olivier_gentile]

Dear Anitha,

The FC package is just a mirror of what you did in your local book for the liquidation.

Did you sell all your fixed assets and your inventories ? Did you pay all your suppliers ? Did you recover all your receivables ? Were the capital and reserves repaid to the shareholders ?

If you have opening balances and no amounts at closing for your balance sheet items, then your flows should be booked reflecting all these operations.

Regards,

Olivier

[Former Member]

Hi Olivier,

We have settled all the accounts as you mentioned above except capital. due to which we have consolidation difference.

Can you suggest me on how to book capital accounts ?which rate it has to pick up ?which rule is used for outgoing shares? so that based on the rule we can book in the package.

Anitha

[olivier_gentile]

Hello Anitha,

If you declared your entity as outgoing during the period in the scope, the local capital closing balance will be reversed on the outgoing flow (usually F98, via the category scenario).

In the parent company you should have booked a depreciation on the related investment (wich should be equal to the closing investment value, possibly reduced by the liquidation profit). Eventually, when the liquidation will be effective, the investment will have to booked in your package as if it has been sold (the remaining net book value in the parent P&L will correspond to your liquidation profit inputed in the subsidiary package).

If the partner is declared as outgoing in the scope, a rule will reverse the investment elimination in the parent assets, as well as the impact in the reserves of the subsidiary. I don't know your customization, but in the IFRS starter kit it is the rule INV-910.

Regards,

Olivier

[Former Member]

Hi Olivier,

I have done all the settings as per your guidance. But the thing is I am not able to see the reporting unit if I run the schedule at consolidated data consolidated amount.

I wanted to see the reports of the liquidating unit till Dec closing.

What is the resolution for this?

Can you Please tell me a resolution for this as I need to explain to my management  by end of day today.

[olivier_gentile]

Anitha,

I think we are reaching the limits of a forum to answer these types of questions.

If your entity is liquidated for your September 2015 reporting (and not at the beginning of the 2015 year), your closing balance sheet will be zeroed out at the end of September whereas your P&L will be accounted for until the date of liquidation in the consolidation reports.

Are you able to see the P&L in your reports ? If not, did you specify an intermediate data entry period in the scope (2015.09) for this entity ?

If you are expecting to see closing value in the balance sheet until december, then it means that your entity is NOT liquidated by the end of September (cf. my message Oct 27, 1:17 PM).

Regards,

Olivier

[Former Member]

Hi Marc,

Thanks for your reply

I have tried doing as above. I cant not see the reporting unit in the reports.

If I do this, elimination in Investment accounts are not happening.

Actually, we wanted to deconsolidate  next period 2016  and so we want to close the books this period. we want to know how to input the data this period in the books of liquidating unit.

I feel scope setting can be doe next period 2016. 

What to do for this period? how to input date in the liquidate unit?

For all remaining accounts elimination is happening but there is huge amount in the consolidated reserve. how to do this?

Please help me on this.

Thanks in advance!

Anitha