on 03-26-2008 3:22 AM
1.Once the consolidation Unit is full divested(100%), how the revenue after discontinued period will be accounted. Because the consolidation unit is fully disposed off to external group. If the earlier holding was having Minority Interest , do we have to provide the minority interest for income from discontinued operation.
2.Can the reclassification function can be used in this context.
3.How can we facilitate the report on income from discontinued operation. Can we maintain in the company/profit center the period in which divested so that we can know the generate the report for the income from discontinued operation with reference to the data of full divesture.
If the total divestiture is handled correctly, including the master data indication of divestiture perod/year, then there is no need for reclassification. The consolidation logic will exclude this data from reporting regardless of whether or not revenues and expenses continue for this cons unit.
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Hi Dan/Gurus
As you know Gain/loss from discontinued operation is standard accounting entires to reflect the income after total divesture.. how do one account it...because it cannot be shown in normal income.
If there is some income coming from there atleast for some period. Whether it has to be accounterd in the divested Cons Unit or Holding company books...inputs are really appreciated...
Discontinued Operation:
- Sale
- disposal
- planned sale in the near future
- shut down
- helding for sale.
For the last 3 cases, IMHO, better be reclass (or initially, all revenue/expenses should come as discontinued, with appropriate accounts assigned).
Additionally, for first 2 cases, the standard configuration and chart of accounts even have special items, like gains from divestiture and losses from divestiture. These items are used in the settings of CoI.
Here's my understanding of how the divestiture works.
Cons Group A
- Parent A
- Sub B
Parent A owns sub B starting in 2006. In 6/2007, Parent A divests Sub B.
In the GL, Parent A books a Gain/Loss from the sale of their company. In BCS, the system will calculate a gain/loss from divestiture as part of the total divestiture activity in the COI. If we have a gain of -10, BCS will book a loss as +10 @ PL30 in Cons Group A.
From an unconsolidated perspective, you are correctly showing the gain on the parents books. At a consolidated perspective, you are still showing the Jan - June income statement from the sub until the end of the year. BCS has offset the "unconsolidated gain" with a "consolidated loss" to prevent double counting the income.
At the end of the year, the parent's gain will roll forward into the prior year earnings. The "consolidated loss" would offset into retained earnings and go away. Now you only have the prior year gain sitting in the parents surplus on a go-forward basis.
Looking at the postings by BCS, I think it might help to have the divestiture gain & loss going to the same account in the COI config. An the Gain booked in the parent on an unconsolidated GL basis needs to go to this account as well for everything to offset cleanly.
That's what I see the system posting...let me know if I'm missing something...can't hurt to have more documentation here!
Chris
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