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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 10 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 – this blog
Part #6: Loss of control while retaining an interest
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 . 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 fifth blog!
Presentation of the business case
Year Y2019
Parent company P5 (USD) purchased a 40% interest in associate S5 for USD40 000. S5 Fair value of net assets is USD80 000.
Goodwill calculation on the 40%:
Year Y2020
S5’s net income = USD19 000
S5’s available-for-sale (AFS) fair value change = USD 1 000
____________
S5’s comprehensive income = USD20 000
Year 2021
P5 acquired a further 35% equity interest for cash consideration of USD55 000.
S5’s fair value of net assets = USD110 000
- Y 2019 equity (USD80 000)
- Y 2020 Comprehensive income (USD20 000)
- Y 2021 Revaluation of other PPE (USD10 000)
S5 fair value of the 25% equity non controlling interests (NCI)= USD30 000
S5 previously held 40% equity interest fair value = USD50 000
Y2021: P5 individual accounts are as follows:
Y2021: S5 individual accounts are as follows:
(Reevaluation posted at consolidated level)
Calculation of the net gain/loss on “disposal” of the associate:
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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