Eliminations and Adjustments Rule for Legal Consolidation

You use this type of business rule when performing a legal consolidation process to generate adjustments and postings that integrate results from subsidiary reporting entities into consolidated financial statements in accordance with Generally Accepted Accounting Principles.

Eliminations and adjustments are executed as a separate task using a Data Manager package. They can also be executed from the Consolidation Monitor in the Consolidation Central area.

Prerequisites

Before executing eliminations and adjustments, do the following:

Enter any ownership changes into the ownership InfoProvider, such as the acquisition of a new company, the sale or transfer of shares, and divestitures.
Update consolidation methods and accounting methods as necessary.
Update percent ownership and percent control within the group.

Note

Ownership calculations can be run to calculate the overall ownership within each group. Consolidation parameters assigned to each entity within each group then need to be validated within the ownership InfoProvider.

You must have the following items in your environment before performing the eliminations and adjustments:

Ownership Model

Stores the overall ownership and percentage control of each entity by group on a category and time dependent basis as well as the corresponding method of consolidation to apply
Group dimension

Provides the ability to store consolidated results by the group to which they relate
Currency dimension

Provides the ability to store consolidated results in the currencies specified for each group

Note
You can use a common dimension for both currency and group ONLY in models migrated from version 7.5. In this version of SAP Business Planning and Consolidation, you must use two separate dimensions - one for group and one for currency.
Method-based multipliers

Define the formulas to use in calculating the amounts to post
Eliminations and Adjustments rules

Define the balances upon which eliminations and adjustments are made and the items such as accounts and flow to which calculated amounts are posted

Features

The most important of the necessary adjustments for legal consolidation relate to the elimination of intercompany activity between the various reporting units, and reclassifications and supporting the model of the applicable rules for the accounting of long-term investments. Eliminations and adjustments rules support the calculation and generation of these postings.

Eliminations and adjustments rules are applicable only to a legal consolidation model to which you attach a corresponding ownership model.

When eliminations and adjustments rules are executed for a given group, the system performs the following:

Reads from the ownership model which entities make up the group, the applicable consolidation method, and the ownership and consolidation percentages.
Determines for each elimination and adjustment defined in the business rules the base amount upon which the elimination and adjustment is to be calculated based on the source data.
Identifies for each elimination and adjustment the corresponding method-based multiplier from the business rules.
Based on the identified method-based multiplier and the method of consolidation assigned to a given entity, determines the formulas to apply in calculating the amounts to post. Ownership and consolidation percentages can be applied in the calculations.
Posts the calculated amounts based upon the posting rules defined in the Eliminations and Adjustments business rules tables.

The following information describes the fields of the General tab in the Business Rules interface of Eliminations and Adjustments:

Source Audit ID: Restricts the type of transaction data to which the rule applies. This can be a member of the audit dimension, or a DIMLIST in the audit dimension. This field can also be blank to represent all audit members with an audit type of I or M. (You can use Adjustment Level to apply further restriction.)
Destination Audit ID: Indicates the kind of data the rule generates. This should be one base member with an audit type of A.
Group Type Filter: Restricts the rule to specific group or scope members.
Entity Property Filter: Similar to Group Type Filter, this restricts the rule to specific entity members.
Adjustment Type: Defines the rule type. Possible values are the following entries:
- Blank: generic rule type
- N: for new entities in the group/scope; similar to a generic rule
- P: for proportional entities
- E: for equity entities
- D: for entities that leave the group/scope in the middle of the year
- L: for entities that leave the group/scope in the beginning of the year
- I: for integration consolidation, which deals with the inconsistencies that occur when some consolidation rules are defined using periodic mode while the ownership hierarchy changes during the fiscal year. For more information, see Integration Rule for Consolidation.
Adjustment Level: Indicates the execution sequence of all elimination rules. The system executes an elimination rule with an adjustment level of 0 first, then level 1, then 2, and so on. The result of an elimination rule with a lower adjustment level can be the input of an elimination rule with a higher adjustment level. The source audit ID for an elimination rule with an adjustment level larger than 0 has further restrictions.
Other Dimension Filter: A string in this field indicates filters or special restrictions on other dimensions. For example, if you have a user-defined dimension called Product and you want to run an elimination for only one of its members called Pro1, you would enter Product = Pro1.
Force Destination Member: When filled, indicates the value to which the system should force the elimination result. For example, if you enter Product = ALL, then for the generated elimination result, the system populates the dimension Product to ALL, no matter what the original value was.
Ownership Filter: Filters the ownership value. For example, to apply a rule to only those entities whose ownership percentage in a group or scope is larger than 70%, you enter POWN > 0.7.