The transfer of the adjusted entity trial balance to a group
To transfer the adjusted entity trial balance to a group, you must meet these prerequisites:
- Set up the thresholds for consolidation methods in Business Modeling.
- Set up the chart of accounts in Business Modeling.
- Set up and parametrize entities and groups.
- Reconcile financial statements of entities.
- Maintain the ownership of owners and owned entities.
- Calculate the effective ownership.
Select and run the Sum Up Balance process.
Control is important to define an appropriate consolidation method. A consolidation method defines how each entity contributes to a group. To identify an appropriate consolidation method, you must consider the percentage of control over an entity.
When you transfer data from the entity context to the group context, ownership is relevant for the entities with these consolidation methods:
- Full
If control is more than 50%, then ownership is important for the calculation of minorities. For example, if ownership is 75%, then a 25% minority is calculated. The remaining 75% of the capital is eliminated against the participation of the parent.
- Proportional
Ownership is important for the recognition of the balance sheet and profit and loss share that is transferred to the group. Ownership can be anything, but the control must be 50% so the entity is recognized as proportional. Then the values of the balance sheet and profit and loss are transferred with the ownership percentage, which can be even 40% or 60%. For example, if a joint venture of four entity parents has 25% of ownership and 50% of control, then all values that are transferred to the group are calculated with 25%.
- At Equity
The values of an At Equity entity are not transferred into a group context. Instead, ownership percentage is used to recognize all effects on the owning entity. For example, the profit and loss result or depreciation of hidden reserves that affect the value of the participation account.