Example: Amortization of Goodwill 

The following example is based on the initial example for activities, which means that it uses the reporting data from the first scenario.

Amortization of goodwill generates the following posting entries in period 3. As in the calculation of new goodwill, amortization of goodwill depends only on the settings for acquisition treatment, not on the accounting technique of the investee unit.

Consolidation with Direct Shares

Goodwill amortization is posted to the income statement as an expense (lines 1 and 2). Amortization of goodwill needs to record minority interests because the group share of upper unit A was not taken into consideration when the goodwill was recorded. The minority interest entry is posted in the income statement (lines 3 and 4). Statistical entries record the entire amortization of goodwill and the corresponding minority share (lines 9 and 10).

	Cons Unit	Partner Unit	Item	Value
1	A	U	Amortization of Goodwill	40-
2	A		Amortization (Expense) in the income statement	40
3	A		Minority interests in Net Income	10
4	A		MI-Income Statement	10-
5	A		Statistical Net Income	40
6	A		Statistical Net Income – Offsetting Item	40-
7	A		MI-Statistical Net Income	10
8	A		MI-Statistical Net Income – Offsetting Item	10-
9	A		Adjusted Statistical Net Income – Amortization of Goodwill	40
10	A		MI-Adjusted Statistical Net Income – Amortization of Goodwill	10
11	A		Statistical Offsetting Item	50-
12	A		Retained Earnings	30
13	A		Net Income (income statement)	30-

After running consolidation of investments in update mode for period 3, the goodwill database table (InfoProvider) in which the goodwill in first consolidation was recorded contains the following data records:

Period	Original Value	Opening Book Value	Ordinary Amortization	Remaining Book Value
3	200	200	40	160
6	200	160	40	120

Consolidation with Group Shares

Goodwill amortization is posted to the income statement as an expense (lines 1 and 2). Amortization of goodwill does not need to record minority interests because the group share of upper unit A was taken into consideration when the goodwill was recorded. The amortization is also recorded statistically (line 5).

	Cons Unit	Partner Unit	Item	Value
1	A	U	Amortization of Goodwill	30-
2	A		Amortization (Expense) in the income statement	30
3	A		Statistical Net Income	30
4	A		Statistical Net Income – Offsetting Item	30-
5	A		Adjusted Statistical Net Income – Amortization of Goodwill	30
6	A		Statistical Offsetting Item	30-
7	A		Retained Earnings	30
8	A		Net Income (income statement)	30-

After running consolidation of investments in update mode for period 3, the goodwill database table (InfoProvider) in which the goodwill in first consolidation was recorded contains the following data records:

Period	Original Value	Opening Book Value	Ordinary Amortization	Remaining Book Value
3	150	150	30	120
6	150	120	30	90