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Consolidation Group Change - Elimination of a Subgroup

Former Member
0 Kudos

Hi there,

We are faced with the following scenario - several intermediate parents/groups were dissolved and we would like to remove them from the hierarchy. The hierarchy looks like this:

CG1 (top node)

  - CU1

       CG2 (intermediate group to be removed)

          - CU2 (owneed 100% by CU1; intermediate parent dissolved)

               CG3

                 - CU3 (owned 100% by CU2)

                   CU3.1 owned by CU3

                   CU3.2.owned by CU3

                   etc.

The CU2 has been dissolved and the trial balance completely eliminated. CU1 has an investment in CU2 and CU2 has an investment in CU3. CU2 has been divested from CU1 and CU3 has been transfered from CU2 to CU1. As of the start of the next year, CG2 is removed from the hierarchy. However, at that point, the opening balance for CG1 no longer matches the closing balance for the year before. This is because documents posted at CG2 and reversed at CG1 used to balance to zero in the previous year but in the year following the change, CG2 is no longer part of the hierarchy and the balances created by these documents are no longer zero at CG1 level. Any suggestiongs on how to best handle this will be very welcome.

Please note that I did search all the previous posts and the posts I found were all dealing with the transfer of a cons unit from one group to another. I could not find a post that talks about moving the entire group. Hence, I decided to start a new discussion.

Thanks & regards,

John

Accepted Solutions (1)

Accepted Solutions (1)

kamalkishoreg
Explorer
0 Kudos

Hi,

Can you please let know how you have done the transfer and divestiture in the previous period and also do let know what tasks you have executed for the transfer and divestiture.

Can you please be more specific on the FS items difference (Like Investment item or equity item) which are not matching.

Hope you have followed the 2 COI activities in the below sequence.

- Internal transfer - CU2 to CU1 for CU3

- Total divestiture of CU2 from CU1

- Consolidation Group change task execution

Thanks

Kamal Kishore Gajula

Former Member
0 Kudos

The following master data changes were made: In CG2, a divestiture year and period for CU2 were set to Dec.

The following AFD activities were recorded:

1. In Investments, a total divestiture of CU2 was posted in CU1.

    CU1  -100%, -$1000, Investee Unit CU2.

2. In Investments, a total transfer of CU3 was posted from CU2 to CU1:

    CU1 +100%,  $1000

    CU2  -100%, -$1000

PCGC tasks were added in the hierarchy for posting levels 02 & 12, 22 and 32 and these tasks were executed.

As a result, the system posts an entry in CG2 with respect to CU3 as partial divestiture:

  CU2 Investment in Subsidiaries  $1000

  CU3 Non-Controlling Interest     -$1000

This entry is reversed in CG1:

  CU2 Investment in Subsidiaries -$1000

  CU3 Non-Controlling Interest      $1000

In addition, in CG1, a total transfer posting is generated:

  CU2 Investment in Subsidiaries -$1000

  CU1 Investment in Subsidiaries  $1000

CG1 looks fine because the NCI posting is reversed. However, in Jan of next year, CG2 is removed from the hierarchy and CG3 is assigned directly under CG1. As a result, the first posting above is is not taken into account anymore and a balance is shown in CG1 for NCI.

kamalkishoreg
Explorer
0 Kudos

Hi,

Can you please check the COI setting for sequence of activities. In the given example the transfer has to take place first then the divestiture , if the sequence of activites is maintained other way round then divestiture takes place first and then transfer.

In order to correct this you need to go the AFD activity upload task and manually change the sequence to transfer first and then divestiture. This would prevent the entry for NCI being generated and there would be no need to reverse it also.

Further since the NCI would be on correct values now , you may need to reverse out the entry on CG1 and then run BCF.

Hope this may solve your problem.

Thanks

Kamal Kishore Gajula

Former Member
0 Kudos

Here is what the settings of activities are:

It appears, total transfer is before total divestiture as you suggested.

kamalkishoreg
Explorer
0 Kudos

HI John

Since data in the previous periods have a consgroup stamping for CG2 , if you delete in the current period you would obviously end up with a mis match of values . In order to maintain data you need to maintained a dummy node CG2 in the hierarchy in the new year also although no LE's exist in that group.

Please recreate the dummy node CG2 and you report may match.

Cheers

Kamal Kishore Gajula

Answers (0)