Automatic Adjustments for Legal Consolidation 
You use this 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.
Prerequisites
Automatic adjustments are executed as a separate task using a Data Manager package. Before executing automatic adjustments, do the following:
Enter any ownership changes into the ownership cube, such as the acquisition of a new company, the sale or transfer of shares, and divestitures. Update consolidation methods and accounting methods appropriately. Update percentage ownership and percentage control within the group.
The Ownership Calculation program then needs to be run to calculate the overall ownership within each group.
Accounting techniques assigned to each entity within each group then need to be validated within the ownership cube.
You must have the following items in your application set before performing the automatic adjustment function:
Ownership Application
Stores the overall ownership and control percentage of each entity by group on a version and time dependent basis as well as the corresponding method of accounting to apply
Group dimension (type currency)
Provides the ability to store consolidated results by the group to which they relate
NoteIt is possible to use a common dimension for both currency and group, or alternately to use two separate dimensions with one for group and one for currency.
End of the note.Consolidation rules
Define the formulas to use in calculating the amounts to post
Business rules
Define the balances upon which automatic 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 application of the applicable rules for the accounting of long-term investments. The automatic adjustment function supports the calculation and generation of these postings.
The automatic adjustment function is applicable only to a legal consolidation application to which you attach a corresponding ownership application.
When the automatic adjustment function is run for a given group, the system performs the following:
Reads from the ownership application which entities make up the group, the applicable accounting method, and the ownership and control percentages.
Determines for each automatic adjustment defined in the business rules tables the base amount upon which the automatic adjustment is to be calculated based on the source data.
Identifies for each automatic adjustment the corresponding consolidation rule from the business rules table.
Based on the identified consolidation rule and the method of consolidation assigned to a given entity, determines the formulas to apply in calculating the amounts to post using the formulas defined in the Consolidation rules tables. Ownership percentage and control percentage can be applied in the calculations.
Posts the calculated amounts based upon the posting rules defined in the Automatic Adjustment business rules tables.