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Consolidation Rules Formulas

former_member599120
Contributor
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933

Dear Expert,

When I saw the consolidation example in Appshell Appset and I review the business rule "Consolidation Rules Formulas". That business rule contains the fields like as: Rule ID, Entity Method, Intco Method, All Formula, Group Formula, Minority Formula, and Remark. I just know that the field "Entity Method" and "Intco Method" contains the method code from the business rule "Consolidation Methods".

I have the questions like as:

1. We can input the field "Entity Method" and "Intco Method" only one code or the sequence of code in the business rule "Consolidation Rules Formulas". What is the different that we input one code with the several code ?

2. What is the uses of the field "All Formula", "Group Formula", "Minority Formula" ?

Thank you very much for your answer and I really appreciate it.

Best Regards,

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kamal_merhebi
Explorer
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I am very hesitant to agree that merging the Method Based Multipliers will give the same result as keeping them separate, in the IFRS starter kit.

As an example, how will you be able to develop an Elimination and Adjustment Rule that targets Newly Acquired companies and differentiate them from existing companies, in addition to treatment of mergers.

These methods (Leaving, Merger, Step Acquisition, Newly Acquired Purchase and Newly Acquired Equity) are distinguished in the method ID, then grouped through Method Based Multipliers. NOT for the purpose of the equation only (ALL FORMULA, GROUP and MINORITY), but also since the Elimination and Adjustment Rule does not have an Entity Field or Method Field, it has METHOD Multiplier.

To explain, Line one of the Method Based Multiplier addresses Existing Companies that have intercompany values with Existing Companies. Line two addresses Existing Companies that have intercompany values with newly Acquired companies, leaving, merged and so on.

Line three addresses newly acquired companies, leaving and so on with existing companies. and line four, newly acquired, leaving, ect... with newly acquired, leaving, ect...

Now the question is, how will you develop an elimination and adjustment rule that targets newly acquired companies, moves the data from F00 to F01, under the Audit_ID INPUT11, for the consoscope and the same month, then conduct the elimination. Or divested to be moved to F98, in addition to other flow/AUDIT_ID treatment. These are different than Existing companies that will not need to be moved from F00 to F01....

To add to it, how will you be able to differentiate in your ELIM and ADJUST Rules between:

All entities but Leaving

All but leaving, divested Interco

Newly Divested

Step Acquisition

Step Divestment

These methods cannot be grouped in the same method multipliers of the existing companies, as the ELIM and ADJUST rules have their field limitations and run on "Entity Group" as per Ownership Model. Thus the need to have these multiple Method Multipliers, despite having the same ALL_FORMULA, GROUP and MINORITY.

As for ALL_FORMULA, it is usually 1. which means automatically -1. this is to eliminate mainly the amount.
Group formula and minority formula are both referenced in the method multiplier (PCON, PCON-POWN, POWN, ect...) and dictate the amounts that will be posted and eliminated.

Minority is used for Equity type ownership, where the holding company owns less that 50% (since proportionate is no longer used in consolidated). it targets the Retained Earning of the held company (equity owned) and eliminates the value. then it reflects the % of ownership of the RE on the
Minority Interest Account of the Held company's consolidated Balance sheet. So if the holding company owns 25% of Company A, and the NI of the held company is 100 USD, the Minority Field in the formula is dictating that only 25 USD is reflected on the Minority Interest of the consolidated company's balance sheet. Meanwhile, all formula is posting the inverse of the amounts for all accounts and group is posting yet another calculation.