Financial Consolidation and Close

Get Involved. Join the Conversation.

Topic

    Mauricio Acatto
    Calculate Subsidiary/Equity retained earnings on Holding...Answered
    Topic posted April 26, 2018 by Mauricio AcattoGreen Ribbon: 100+ Points, last edited April 26, 2018, tagged Balance Sheet, Consolidation, Eliminations, Income Statement 
    104 Views, 1 Comment
    Title:
    Calculate Subsidiary/Equity retained earnings on Holding companies
    Summary:
    Is it possible to calculate the corresponding retained earnings for Subsidiaries and Equity companies on the Holding company instead of the Consolidated?
    Content:

    Hi,

    As a requirement of our contractor, the participation in the Retained Earnings of the Subsidiary and Equity companies must be calculated in the Holding company instead of doing it on the consolidated, as we understand it should be done.

    The Investment rule set does eliminate the investment on the Owners Equity but not on the Retained Earnings, so we understand any elimination corresponding to the Retained Earnings must be done, either on the CalcMgr calculation rule or the consolidation rules. We managed to do that but just could on the Consolidated, but not on the Holding, where we require it.

    It would be helpful any help on the feasibility, or how it is supposed to be done.

    Thanks!

    Best Comment

    Keith Glide

    If I understand your question correctly, you wish to calculate what we refer to as "Equity Pick-Up". The owning / holding company recognizes their share of the earnings of any owned companies on a period-by-period basis. This share of earnings is recognized at the legal company level rather than in the consolidated results. This requirement is common in the Netherlands (and perhaps a few other countries) but is not so common globally. The results are in effect a "current value" valuation of the investment in the owned company instead of the more traditional "lower of cost or market" valuation.

    Equity Pick-Up must be calculated at the Holding company level from its siblings (and descendants of siblings in a multi-level organization structure) so it cannot be calculated using Consolidation Rules. We anticipate adding standard system Equity Pick-Up Configurable Calculation rules at some point but have no targeted date as yet.

    You could write the necessary rules in Configurable Calculations but need to make sure that the siblings of a Holding company are always calculated before the Holding company is calculated.

    Comment

     

    • Keith Glide

      If I understand your question correctly, you wish to calculate what we refer to as "Equity Pick-Up". The owning / holding company recognizes their share of the earnings of any owned companies on a period-by-period basis. This share of earnings is recognized at the legal company level rather than in the consolidated results. This requirement is common in the Netherlands (and perhaps a few other countries) but is not so common globally. The results are in effect a "current value" valuation of the investment in the owned company instead of the more traditional "lower of cost or market" valuation.

      Equity Pick-Up must be calculated at the Holding company level from its siblings (and descendants of siblings in a multi-level organization structure) so it cannot be calculated using Consolidation Rules. We anticipate adding standard system Equity Pick-Up Configurable Calculation rules at some point but have no targeted date as yet.

      You could write the necessary rules in Configurable Calculations but need to make sure that the siblings of a Holding company are always calculated before the Holding company is calculated.