Historical Goodwill Amortization

[Former Member]

Hi Gurus,

we are planning to start a new consolidation environment.

One problem we have is related to legacy amortization, since we wolud like to perform automatic goodwill amortization.

We do not have an underlying SAP EC-CS or FI-LC, but we are speaking about the historical goodwill that was generated in the past and now must be considered as well since we are going to perform the first consolidation.

We found OSS Notes:

610218 - Legacy data transfer of manual goodwill entries

379665 - SAP consolidation: Legacy data transfer for goodwill entries

and would like some of you to share your own experience in this situation, with this notes.

Let's say this year (2009) is Y: as a consequence of First Consolidation BCS will calculate 1000 as Goodwill and we be finally depreciated up to year 2018.

Historical Goodwill emerging in Y-4 (2005) was 1000, to be depreciated in 10 years (100 for each year): so capitalided goodwill depreciation is 400.

So the questions are:

1. Goodwill will be depreciated up to year Y+6 (2013), considering past depreciation quotes?

2. Will these postings be considered in further operations (eg. divestiture or organizational changes)?

3. Are there any other ways to reach this result without AFD?

Thanks in advance for your cooperation.

GFV

[Former Member · Accepted solution]

we wolud like to perform automatic goodwill amortization

i thought goodwill couldn't be amortized any more, but should be tested for [impairment|http://en.wikipedia.org/wiki/Goodwill_(accounting)] and the latter is not easily automated. send it back to your accounting practices group

[Former Member · Accepted solution]

Concur with Greg.

[dan_sullivan · Accepted solution]

For USA GAAP Greg is correct.

Other non-USA GAAP may allow goodwill amortization and COI may be configured to amortize.

[GFV · Accepted solution]

Hi guys,

the question concerns technical aspects rather than functional or legal issues.

In other word the situation is the following:

I have Goodwill emerging in past years (let's say 2005, 2006, 2007, ...), that was amortized in Legacy system: so, in each year, we have some postings for each of the (past) Goodwill(s).

This year 2009 will be First Consolidation: users want amortizations related to past Goodwill(s) to be recorderd automatically by SEM-BCS, without manual intervention

So the question are:

1. Can this be requirement be satisfied with standard functionalities?

2. Will Goodwill AFD manually recorded for the past years be considered within First Consolidation?

As per my comprehension Dan says this requirement can be satisfied.

Thanks for your cooperation.

GFV

[dan_sullivan · Accepted solution]

The recommended "standard" way to address this is to include previous years' goodwill in the legacy data transfer and also record first consolidation so that the existing goodwill is automatically determined and posted by COI.

[Former Member · Accepted solution]

 For USA GAAP Greg is correct.

Not only for USA GAAP:

The new standard requires that all business combinations which initiated after March 2004 must be accounted by using the purchase method and goodwill is no longer amortized but has to be tested for annual impairment (IFRS 3, 2007):

http://organizacija.fov.uni-mb.si/index.php/organizacija-en/article/viewFile/908/777

[GFV · Accepted solution]

Thank you Dan for your clarifications.

As I told it's not a matter of legal requirements (local GAAP) rather than a matter of technicality.

I would like you to kindly clarify also the sentence:

and also record first consolidation

Do you mean we have to record also Goodwill related to this year manually, in the same way we will post Historical Goodwill(s)?

Won't this be posted automatically by the system?

Thank you in advance for your cooperation.

GFV

[dan_sullivan · Accepted solution]

Yes, goodwill will automatically be posted by the system for COI when first consolidation is recorded. Sorry if I confused anyone.

[GFV]

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