Reclassification Rules in Subsequent Period of Group Reporting S4H Version 1909

[former_member787437]

Dear Experts,

We have implemented group reporting in S4H 1909 version by applying Consolidation with Reclassification Rules.

In first consolidation period whatever be the legacy data is uploaded, that has been properly consolidated as per various reclassification rules but in subsequent period consolidation entry is only posted for minority portion(say 10%) of net income under reclassification method "Consolidation/Elimination of Investment/ Equity_2100"

Now client required that majority portion of Net Income of subsidiary consolidation unit will also post to the Investment in Subsidiary account of holding company in subsequent period.

I have tried to create multiple custom reclassification rules of which triggering item is Net Income of subsidiary but post journal entry in both consolidation unit but unfortunately not able to generate required entry in both the units and only able to capture for minority portion(10%) and not for majority portion(90%).

can anyone please suggest how we can create the custom rule so that entry can be triggered in both the Units as per share holding pattern and what would be the implication of the same.

Regards,

Kamala

[selina_sima]

Hello Kamala,

SAP pre-delivered configurations have the same result as what you client requires.

For example, in subsequent period, subsidiary earns 100 net income (subsidiary is 90% owned by group).

With sap configuration, the increase of group equity 90 is eliminated and additional NCI 10 is posted.

What you client requires:

1. Increase the investment with group portion of subsidiary equity earned in subsequent period, namely add 90

2. Eliminate the investment increase 90 with earned group portion of subsidiary equity 90, then calculate additional non-controlling interest 10

You can find both approaches have the same result.

[selina_sima]

Correct to wrong wording. No feasible to revise in above comment once posted. Below is what to express.

With sap configuration, the increase of group equity 90 is reserved and additional NCI 10 is posted.

[former_member787437]

Hi Selina,

Inspite of the fact that system is working fine and all workflow is properly triggering, but referring to my original question where client required that system should post following two entries as per their local requirement:

In the books of Subsidiary:

(taking an example triggering item is Net Income $100 and majority portion of Net Income is $90(90%of $100)

Retained Earning account Debit 90

Investment in Subsidiary Account Credit 90

In the books of Holding Company:

Investment in subsidiary account Debit 90

Retained Earning Account Credit 90

Is there any way where Net Income of subsidiary is trigger item and system calculate majority portion and can post above two entries in two different books of account.

I have tried by creating new sequence under Method "S2100" but only entry can be possible in Subsidiary book other effect in the books of holding company not able to post it might happen since Net Income calculated under Data monitor doesn't have any partner Unit.

Please suggest.

Thanks & Regards,

Kamala

[selina_sima]

Hello Kamala,

Sorry, I don't get any notification that you have follow-up question regarding this topic.

Is there something wrong with the posing in the books of subsidiary? I would expect the posting in subsidiary local book is something like

Debit: Cash 100

Credit: Net Income ( or Retained Earning ) 100

Anything misunderstood?

Regarding your local requirement that investment in subsidiary account is adjusted with the group portion of subsidiary's equity change in the book of holding company and then do the elimination of investment in subsequent periods, I would suggest you can try it with equity pickup function and then adjust relevant steps for subsequent consolidation in reclass method S2100 accordingly.

For the detailed function introduction, you can check Equity Pickup - SAP Help Portal.

Best regards,

Selina

[selina_sima]

With sap configuration, the increase of group equity is reserved and additional NCI is posted.

We should understand why the elimination against investment is required in subsequent period. It is because investor's investment is adjusted with investee's equity change owned by investor in local book (e.g. Dr: investment Cr: group portion of equity change in investee). Then we include investee's B/S (incl. group portion of equity) again in consolidated B/S. You can imagine this part is double counted from group view. Thus elimination is required. With SAP configuration, there are no double counted equity and investment adjustment. Then elimination between investment adjustment and group portion of equity in subsequent period is not required.

[former_member787437]

Hi Shelina,

Thanks for your answer!

But for consolidation in subsequent period(in my case 1st period of current year) there is only three sequence pre-delivered under Reclassification method "2100 i.e Consolidation/elimination of investment/Equity" by SAP which is as follows:

Sequence 100: (Y-COI-NETINCOME) under this rule only minority portion(say 10%) of Net Income posted to NCI where as 90% Net Income of subsidiary consolidated Unit still lies in Net Income FS item of subsidiary company so how it get eliminated.

And there is no other Journal entry has been posted to eliminate 90% of net income. so I am not clear how 90% has been eliminated even when I executed group reports I can see the PL Net income(say -100 in FS Item 799000) and Balance sheet Net Income ( say 100 in FS Item 317000)) but there is no elimination entry against these two entries.

Sequence 110: (S-COI-OCI-MOV) No Journal entry

Sequence 140: (Y-COI-RET-EARN-SC) No Journal entry

There is on other Journal entry has been posted for task "Consolidation/elimination of investment/Equity-2100" in subsequent period.

so can you please highlights some points on elimination of 90% of net income of Subsidiary unit in subsequent period.

Regards,

Kamala

[selina_sima]

Sorry Kamala for misleading. I just found that my Hand and mind were not on the same page when adding comments.

Here it is:

With sap configuration, the increase of group equity 90 is reserved and additional NCI 10 is posted.

We should understand why the elimination against investment is required. It is because investor's investment is adjusted with investee's equity change owned by investor in local book. Then we include investee's B/S (group portion of equity) again in consolidated B/S. You can imagine this part is double counted from group view. Thus elimination is required. With SAP configuration, there is no double counted equity, Thus elimination is not required.

Is it clear now?