In first consolidation, the proportional equity of a subsidiary is cleared against the proportional investment book value of the parent. Beforehand, minority interest is transferred to minority interest items (see also Minority Interest in Investments and Equity and Minority Interest in Annual Net Income).

In subsequent consolidation, minority interest is transferred to the changes in equity resulting from dividend distributions or earnings retention.

You have the option of assigning any positive differential resulting from elimination to an individual asset item by eliminating proportional hidden reserves/fair value adjustments. Any positive remainder is posted to the goodwill item assigned to the method. Goodwill is then either amortized or proportionally eliminated. Negative differentials are assigned to the negative goodwill item and can neither be amortized nor proportionally eliminated.

In order to eliminate a differential on the assets side and not affect net income, you can also specify an appropriation item under goodwill (see also Differential).