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This new series of seven blogs is dedicated to help deal with the most frequent consolidation M&A requirements when using “SAP® Financial Consolidation 10.0, Starter Kit for IFRS”. A first series was published in 2011 to help deal with those cases when using SAP® Planning and Consolidation 10.0, starter kit for IFRS, version for SAP NetWeaver. These papers demonstrate SAP’s supremacy in addressing customers’ most complex and frequent business requirements

  • Part #1: Acquisition of a subsidiary (full goodwill method) – this blog
  • Part #2: Loss of control without any retained interest – see article
  • Part #3: Acquisition of further equity interests from Non Controlling Interests
  • Part #4: Partial disposal of an investment in a subsidiary while control is retained
  • Part #5: Step acquisition
  • Part #6: Loss of control while retaining an interest
  • Part #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 FC 10.0 Starter kit for IFRS SP2. 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 Business Analytics 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 first blog!

Presentation of the business case

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Parent P1 pays USD 150 000 for 60% of subsidiary S1.

Net assets of S1 are as follows:

/wp-content/uploads/2012/04/blog1b_90703.png

Through valuation techniques, fair value of non-controlling interests is determined to be USD 100 000. Goodwill is calculated as follows:

/wp-content/uploads/2012/04/blog1c_90714.png

Parent’s interest in goodwill is calculated as follows:

/wp-content/uploads/2012/04/blog1d_90713.png

Goodwill attributable to non-controlling interests is USD 80 000 (= 200 000 – 120 000).

Practical guide

Please click here to access the practical guide

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

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