Capital consolidation

Assets, liabilities, income, and expenses of a subsidiary must be reported in full in consolidated financial statements even if the parent entity holds less than 100% of the subsidiary. The investment book value is offset against the proportionate equity that corresponds to the equity interest of the parent entity. Therefore, minority interests must be reported within the equity in the consolidated statement of the financial position. Under IFRS, minority interests are referred to as non-controlling interests.

To perform capital consolidation, these steps are required:

1. Elimination of investments in subsidiaries against the proportional share values. Done by posting a manual journal.
2. Disclosure of non-controlling interests (minorities) in the balance sheet. Done by an automatically generated journal.

   The rule that is used in this process is called Direct and Indirect Minorities, and creates automatic journals. The journals for direct and indirect minorities have the journal category of C2. Journal categories are displayed on the journal list in Journal Management.

3. Disclosure of non-controlling interests (minorities) in the income statement.

   The rule that is used in this process is called Minorities, and creates automatic journals with the journal category of M1. Journal categories are displayed on the journal list in Journal Management.