Acquisition in the middle of the month

[Former Member]

Hi All,

I have a query on how Consolidation of Investments will be done when there is acquisition happening in the middle of the month. Just to make it clear i am quoting an example

1. Company A is holding 20 % in Company B. As company B is an associate of company A consolidation is done as per Equity method. Then Company A acquires additional 40 % on 15th of a month. So Company B is associate from 1st to 15th and Subsidiary from 15th to Month end.

In this case the equity method will be applied for half of the month and purchase method will be applied for next half of the month. This poses two issues

a. I will have to consider P/L of company B only for half of the month (15th to end of the month). As we are loading monthly data and not the date wise data into BCS how do we take care in this situation.

b. even for GW/Minority Interest calculation I will have to consider Equity and Profit earned till 15th.

I can enter whether the acquisition is at the beginnning of the month or at the end of the month but there is no place to enter any mid month acquisition..

Pl let me know the solution or any pointers.

Shivaprasad

[Former Member · Accepted solution]

Indeed, we SEM-BCS you have only two choices: 1st consolidation either at the beginning or at the end of the period.

My personal preferrance would be: at the end. All B/S items (exept of RE and GW) will correspond to the actual status of the company. Just calculate RE from the associate for the half month and estimate the proper GW (maybe you'll have to make some adjustment to one of the equity item in order to get the correct GW amount).

[dan_sullivan]

In this case, which is not at all unusual, the best option is to choose either the beginning or ending of the month and make manual adjustments for the half month differences.

The system can only handle a whole period and not parts, the differences are to be made as manual adjustments.