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This series of seven blogs is dedicated to handling scope changes using “SAP® BusinessObjectsTM Planning and Consolidation 10.0, Version for SAP Netweaver Starter Kit for IFRS”. The objective is to illustrate in the BPC Starter kit for IFRS some of the most frequent scope changes.

Blog #1: How to manage scope changes with SAP BusinessObjects Planning and Consolidation 10.0, Version for SAP Netweaver Starter Kit for IFRS? Part 1 (full goodwill method)

Blog #2: Loss of control without any retained interest – this blog

Blog #3: Acquisition of further equity interests from Non Controlling Interests

Blog #4: Partial disposal of an investment in a subsidiary while control is retained

Blog #5: Step acquisition

Blog #6: Loss of control while retaining an interest

Blog #7: Internal merger between two subsidiaries

Each blog introduces a practical guide that deals with the following questions:

–          What are the regulation requirements that applies to the business case

–          How to handle the business case in the starter kit for IFRS

–          What are the impacts on the financial statements

The business cases presented in these blogs are included in the set of data provided with BPC NW 10.0 Starter kit for IFRS. You can consult them in the database. Please, refer to the operating guide delivered along with the starter kit for further detail on the consolidation process.

These blogs have been written by members of the SAP EPM (Enterprise Performance Management) Starter Kits & Innovations team that develops starter kits on top of SAP financial consolidation products, Financial Consolidation (FC) and Business Planning and Consolidation (BPC). The starter kits are preconfigured contents created to deliver business logic, to speed-up the application deployment and to provide guidance to help maximize advantages of the product. The contents provided in the starter kits consist of reports, controls and rules for performing, validating and publishing a legal consolidation in accordance with IFRS. SAP starter kits for IFRS are provided to BPC/FC customers at no additional charge; they can be downloaded from SAP service market place at http://help.sap.com/.

Now to the second blog!

Presentation of the business case

Year 2013

The 1st of January, parent company P2 (USD) acquires 100% interest of subsidiary PS2 (EUR) for USD 95 000 in cash. PS2 net value of the identifiable assets and liabilities is EUR 87 500

Goodwill calculation = EUR 7 500 (x rate: 1 USD = 1 EUR)

PS2 profit for the year = EUR 10 000 (average rate for 2013: 1 USD =0,80 EUR)

On December 31st, the exchange rate is 1 USD =0,85 EUR

Year 2014

PS2 goodwill impairment = EUR 4 000

PS2 profit for the year = EUR 15 000

The 1st of December P2 sells its 100% controlling interests in PS2 for

USD 100 000. The average rate from January 1st to December 1st is

1 USD = 0,75 EUR. The spot rate on December 1st is 1 USD = 0,80 EUR

Note: For a matter of simplification, the case study is displayed on two years even if it is not fully relevant from an IFRS perspective (e.g. IFRS5)

PS2 net assets at the disposal date is EUR 112 500 (87 500 + 10 000 + 15 000).

PS2 individual accounts converted in USD and including goodwill are as follows:

Calculation of net gain/loss on the disposal

Practical guide

Please click here to access the practical guide

The Next Blog

In the next blog of this series, we will look at the Acquisition of further equity interests from Non Controlling Interests (Equity transaction)

Acknowledgements to Laetitia Lamoureux, Caroline Verrier and Jean-François Bouillon from the EPM SK&I team for their high contribution to the “Consolidation Practical guide”.

Your comments about the contents are very welcome. Let us know what you wish to write about.
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