Consolidation of segments
A segment can be, for example, a division, profit center, region, or product line.
If you consolidate segments as part of the consolidation of expenditures and revenue, the logic differentiates between intrasegment and intersegment eliminations.
If the segment and intersegment are the same, then an intrasegment elimination is performed.
If the segment and intersegment are different, an intersegment journal is run.
Segments and intersegments can be the same within segment-intersegment relations. Entities and intercompanies must differ within entity-intercompany relations.
Because of the structure of the DSTAGE dimension, a journal entry to an intrasegment affects only an individual consolidated segment.
This table shows an example of how values are recorded in the Revenue account and the contra account of Direct material cost when segments and intersegments are different:
| Entity | Intercompany | Segment 1 | Intersegment 1 | Account | |
|---|---|---|---|---|---|
| Revenue | Direct material cost | ||||
| Genesis Cars | Genesis Germany | Automotive | Trading | 2,125.00 | -12,500.00 |
| Genesis Germany | Genesis Cars | Trading | Automotive | 12,500.00 | -2,125.00 |
This table shows an example of how values are recorded in the Revenue account and the contra account of Direct material cost when segments and intersegments are the same:
| Entity | Intercompany | Segment 1 | Intersegment 1 | Account | |
|---|---|---|---|---|---|
| Revenue | Direct material cost | ||||
| Genesis Cars | Genesis Automotive | Automotive | Automotive | 162.50 | -5,000.00 |
| Genesis Automotive | Genesis Cars | Automotive | Automotive | 5,000.00 | -162.50 |
Financial Consolidation is based on hierarchical segmentation. If you use this type of segmentation, breaking down, for example, a value of 100 separately into a business and region is not sufficient. You must also consider the connection between the business and region. Therefore, you can break down the value of 100 as in this example:
- 60: Automotive/Austria
- 10: Automotive/Sweden
- 20: Trading/Austria
- 10: Trading/Sweden
Currently, no hierarchical segmentation reports are available. If required, you can create those reports. The differentiation is important only if more than one segment is used.