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2. © 2011 Wellesley Information Services. All rights reserved. A Simplified Approach for Consolidation of Investments for a Faster Close Dan Sullivan focusSAP

3. What We’ll Cover … Introduction Exploring consolidation of investments Reporting with BCS Identifying COI Alternatives Configuring in BCS Wrap-up 2

4. BCS Functions Available Balance carryforward Data collection Validation of reported data Standardization and top-side adjustments Reconciliation task Change to Consolidation Group Currency translation method Allocation Value Adjustments Inter-unit (IU) elimination Elimination of IU profit/loss in inventory Elimination of profit/loss in transferred assets Consolidation of Investments (COI) Reclassification 3

5. Accounting Techniques Purchase method  Parent unit has a dominating influence over investee unit; dominating influence exists if parent unit:  Directly or indirectly owns the majority of the investee’s voting rights, or  Is able to exercise such influence due to a contract, the articles of incorporation, and so forth  Financial statements of investee unit are included in their entirety in the consolidated financial statements 4

6. Accounting Techniques (cont.) Equity method  For subsidiary consolidation units not consolidated using purchase or proportional methods  Financial data of equity unit is not taken into account in the consolidated financial statements  Only changes in stockholders’ equity of equity unit are taken into consideration; these affect, in particular, the investment value stated in the consolidated balance sheet  Equity units are not displayed in reporting 5

7. Accounting Techniques (cont.) Mutual Stock method  Typically used in management consolidation  The mutual stock method and the purchase method are complementary  Associated with the concept of delta documents – the documents in the lower-level cons group using the purchase method, and those in the cons groups that use the mutual stock method, merely have to be totaled  In management consolidation, the mutual stock method is an alternative to the equity method  Requires fully implemented COI 6

8. Accounting Techniques (cont.) Proportionate method  SAP COI does not include this method  SAP suggests using reclassification tasks to carry out proportionate consolidation  Collects items of a unit’s balance sheet and income statement into the consolidated statements to the extent of the investor unit’s percentage of ownership in the investee unit, rather than at the full amount 7

9. Consolidation of Investments: Functions Purchase method activities  First consolidation  Subsequent consolidation  Goodwill amortization  Step acquisition  Partial divestiture  Total divestiture  Indirect increase/decrease  Capital increase with percentage change  Transfers  Indirect transfers 8

10. 9 Consolidation of Investments: Functions (cont.) Equity method activities  First consolidation  Subsequent consolidation  Goodwill amortization Calculation of shares (post shares on statistical items into totals database) Calculation and posting of goodwill Calculation and posting of minority interests Calculation and posting of equity earnings/losses Overall customizing check

11. 10 Consolidation Reports Using Virtual Cubes SAP SEM-BCS programs Interpret the totals data read from the basic cube Function module 1 Including selection conditions 3 2 6 Basic cube for totals data (Transactional InfoCube) Virtual cube for totals data (Without data; with the same structure as the basic cube) Query Report 4 5

12. Reporting on Virtual Cubes – Logic Applied Example:  Consolidated group A is selected in a given report for data in Version 100 period 002/2010  From the consolidation configuration, it is determined which units made up the group as of 002/2010  The period of first consolidation/divestiture is checked, and it is determined that units A, B, and C make up the group at that point in time  All are accounted for on the purchase method; therefore, base data (i.e., posting level 00 and 10) would be selected for these units 11 CG-A ABC

13. 12 Reporting on Virtual Cubes – Logic Applied (cont.) Example: (cont.)  The group should only include eliminations among the three companies making up the group  Elimination records from the Totals cube are only selected if both the unit and the partner unit are part of the group (A, B, or C)  COI records specific to group A are then selected  The results are then accumulated, and the results for the consolidated group are returned

14. COI Alternatives Purchase method only, without COI configuration Both purchase and equity methods, without COI task Fully implemented COI 13

15. Purchase Method Only, Without COI Configuration Automatic elimination of investment and corresponding subsidiary equity for purchase method Statistical balance for percent of minority share Reclassification to automatically post minority interest No “mysterious” statistical postings No configuration of COI Does not automatically post gains/losses on divestitures 14

16. Both Purchase and Equity Methods, Without COI Task Automatic elimination of investment and corresponding subsidiary equity for purchase method Statistical balance item for percent of minority share Statistical balance item for percent of equity ownership Reclassification to automatically post minority interest Reclassification to automatically post earnings/losses Equity method subsidiary P&L data must be loaded Equity method subsidiary must be included in consolidation group hierarchy No “mysterious” statistical postings Configuration of COI required to use accounting technique assignment for reporting, but no COI task is used No automatically posting of gains/losses on divestitures 15

17. 16 Fully Implemented COI Automatically posts gains/losses on divestitures Recommended for group shares and complex scenarios Uses “mysterious” statistical postings

18. 17 Purchase Method Only, Without COI Configuration Statistical balance item to record balance for percent of minority share  Breakdown to include unit of measure to allow for quantities  Plus additional statistical flow item for offset

19. 18 Purchase Method Only, Without COI Configuration (cont.) Reclassification to automatically post minority interest  Method layout with components  Percentage Rate  Source  Condition  Target

20. 19 Purchase Method Only, Without COI Configuration (cont.) Reclassification to automatically post minority interest (cont.)

21. 20 Purchase Method Only, Without COI Configuration (cont.) Reclassification to automatically post minority interest (cont.)  Condition Key Figure of Quantity > 0  Characteristic = Statistical balance item to record balance for percent of minority share

22. 21 Purchase Method Only, Without COI Configuration (cont.) Reclassification to automatically post minority interest (cont.)  Source/Target  Source is Minority Interest P&L Item  Target is Minority Interest Balance Sheet Item  Sub-assignments as needed

23. 22 Both Purchase and Equity Methods, Without COI Task Include COI characteristics in BCS databasis  Investee  Acquisition Year  Acquisition Period Generate COI data streams (target and virtual InfoProvider)  Investment Data  Equity Data  Equity Holdings Adjustment Data  Goodwill Data  Activity Numbers  Sequence of Activities  Activity Sorting

24. Both Purchase and Equity Methods, Without COI Task (cont.) Include COI characteristics in Consolidation Area  Investee  Acquisition Year  Acquisition Period  In Consolidation Area Settings select Consolidation of Investments Exit BCS workbench to enable COI configuration 23

25. 24 Both Purchase and Equity Methods, Without COI Task (cont.) Configure COI (cont.)

26. 25 Both Purchase and Equity Methods, Without COI Task (cont.) Configure COI (cont.)

27. 26 Both Purchase and Equity Methods, Without COI Task (cont.) Configure COI (cont.)  Create Equity Methods with Direct Shares

28. 27 Both Purchase and Equity Methods, Without COI Task (cont.) Configure COI (cont.)  Create Purchase Method with Direct Shares

29. 28 Both Purchase and Equity Methods, Without COI Task (cont.) Update master data to assign Accounting Technique to all entities  Menu path Process View  Master Data  Accounting Techniques  Assignments are time dependent, so be sure the parameters are set to the correct period/year for the assignment

30. 29 Both Purchase and Equity Methods, Without COI Task (cont.) Elimination of investment and corresponding subsidiary equity for purchase method (same as before) Statistical balance item to record balance for percent of minority share (same as before) Statistical balance item to record balance for percent of equity share (similar to above) Reclassification to automatically post minority interest (same as before) Reclassification to automatically post equity earnings/losses (similar to above)

31. 30 Fully Implemented COI Too much to cover in this session  Handles more complex scenarios  Automatically posts gains/losses on divestitures  Uses “mysterious” statistical postings

32. 31 Resources http://help.sap.com/saphelp_sem60ep1/helpdata/en/67/f7e73ac6e7 ec28e10000000a114084/frameset.htm  SAP Help for BCS https://websmp102.sap-ag.de/sem *  Follow: SAP ERP  SAP ERP Analytics  SEM  Business Consolidation  Media Library  Presentations*  Follow: SAP ERP  SAP ERP Analytics  SEM  Business Consolidation  Media Library  How To’s  How to… Set up a SEM-BCS Data Mart in BW https://forums.sdn.sap.com/forum.jspa?forumID=278&start=0  Search for relevant SAP SEM-BCS topics * Requires login credentials to the SAP Service Marketplace

33. 32 Your Turn! How to contact me: Dan Sullivan dan.sullivan@focusSAP.com

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