How to manage scope changes with SAP Financial Consolidation 10.0, Starter Kit for IFRS? Part 6

[fabienne_rojo]

This new series of seven blogs is dedicated to help deal with the most frequent consolidation M&A requirements when using “SAP® Financial Consolidation 10.0, Starter Kit for IFRS". A first series was published in 2011 to help deal with those cases when using SAP® Planning and Consolidation 10.0, starter kit for IFRS, version for SAP NetWeaver. These papers demonstrate SAP’s supremacy in addressing customers’ most complex and frequent business requirements

Part #1: Acquisition of a subsidiary (full goodwill method)

Part #2: Loss of control without any retained interest

Part #3: Acquisition of further equity interests from Non Controlling Interests

Part #4: Partial disposal of an investment in a subsidiary while control is retained

Part #5: Step acquisition

Part #6: Loss of control while retaining an interest – this blog

Part #7: Internal merger between two subsidiaries

Each blog introduces a practical guide that deals with the following questions:

-          What are the regulation requirements that applies to the business case

-          How to handle the business case in the starter kit for IFRS

-          What are the impacts on the financial statements

The business cases presented in these blogs are included in the set of data provided with FC 10.0 Starter kit for IFRS SP3. You can consult them in the database. Please, refer to the operating guide delivered along with the starter kit for further detail on the consolidation process.

These blogs have been written by members of the SAP Business Analytics EPM (Enterprise Performance Management) Starter Kits & Innovations team that develops starter kits on top of SAP financial consolidation products, Financial Consolidation (FC) and Business Planning and Consolidation (BPC). The starter kits are preconfigured contents created to deliver business logic, to speed-up the application deployment and to provide guidance to help maximize advantages of the product. The contents provided in the starter kits consist of reports, controls and rules for performing, validating and publishing a legal consolidation in accordance with IFRS. SAP starter kits for IFRS are provided to BPC/FC customers at no additional charge; they can be downloaded from SAP service market place at http://help.sap.com/.

Now  to the sixth blog!

Presentation of the business case

Year 2019

P6 (USD) purchased a 100% interest in subsidiary S6 for USD125 000

S6 Fair value of net assets is USD100 000

A goodwill of USD25 000 was recognized.

Year 2020

S6 books a change in fair value of Available-For-Sale (AFS) financial assets for USD1 000

S6’s profit for the year = USD19 000

Year 2021

P6 disposes 75% of its equity interest in S6 for USD115 000 on January, 1^st

P6 resulting 25% on S6 is classified as an associate under IAS28 and has a fair value of USD38 000

P6 individual accounts are as follows:

S6 individual accounts at the end of 2020 are as follows:

Calculation of the net gain/loss on disposal:

Calculation of the fair value adjustment on the 25% retained interest in S6:

Calculation of the new goodwill

Practical guide

Please click here to access the practical guide

Acknowledgements to Jean-François Bouillon and Caroline Verrier from the EPM SK&I team for their high contribution to this "Consolidation Practical guide".

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