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SAP AG 2001 AC660 EC-CS: Consolidation Functions SAP AG EC-CS: Consolidation Functions EC-CS: Consolidation Functions R/3 Release 4.6C Januar 2001 Material number 5004 2175
Transcript
Page 1: AC660 ECCS

SAP AG 2001

AC660 EC-CS: Consolidation Functions

SAP AG

EC-CS:ConsolidationFunctions

EC-CS:ConsolidationFunctions

�� R/3

�� Release 4.6C

�� Januar 2001

�� Material number 5004 2175

Page 2: AC660 ECCS

SAP AG 1999

Copyright 2001 SAP AG. All rights reserved.

Neither this training manual nor any part thereof maybe copied or reproduced in any form or by any means,or translated into another language, without the priorconsent of SAP AG. The information contained in thisdocument is subject to change and supplement without priornotice.

All rights reserved.

Copyright

Trademarks:

��Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.

��Microsoft®, WINDOWS®, NT®, EXCEL®, Word® and SQL Server® are registered trademarks of Microsoft Corporation.

��IBM®, DB2®, OS/2®, DB2/6000®, Parallel Sysplex®, MVS/ESA®, RS/6000®, AIX®, S/390®, AS/400®, OS/390®, and OS/400® are registered trademarks of IBM Corporation.

��ORACLE® is a registered trademark of ORACLE Corporation, California, USA. ��INFORMIX®-OnLine for SAP and Informix® Dynamic ServerTM are registered trademarks of

Informix Software Incorporated. ��UNIX®, X/Open®, OSF/1®, and Motif® are registered trademarks of The Open Group. ��HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C®, World Wide

Web Consortium, Laboratory for Computer Science NE43-358, Massachusetts Institute of Technology, 545 Technology Square, Cambridge, MA 02139.

��JAVA® is a registered trademark of Sun Microsystems, Inc. , 901 San Antonio Road, Palo Alto, CA 94303 USA.

��JAVASCRIPT® is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape.

��SAP, SAP Logo, mySAP.com, mySAP.com Marketplace, mySAP.com Workplace, mySAP.com Business Scenarios, mySAP.com Application Hosting, WebFlow, R/2, R/3, RIVA, ABAP™, SAP Business Workflow, SAP EarlyWatch, SAP ArchiveLink, BAPI, SAPPHIRE, Management Cockpit, SEM, are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other products mentioned are trademarks or registered trademarks of their respective companies.

��Design: SAP Communications Media

Page 3: AC660 ECCS

SAP AG 1999

Enterprise Controlling

Cost Managementand Controlling

AC040 5 days

Financial Accountingand Reporting

AC010 5 days

Profit CenterAccounting

AC610 2 days

EC-CS: Consolidationfunctions

AC660 5 days

Financial ClosingAC205 2 days

E C - E I S: Executive Information System E C - B P: Business Planning

E C - P C A: Profit Center Accounting

Level 3

Special PurposeLedger

AC220 5 days

E C - C S: Consolidation

Executive InformationSystem (EIS) 3 -Business Planning

AC625 4.6b 1 day Executive InformationSystem (EIS) 1 -Reporting

AC615 4.6b 2 days

Level 2

Executive InformationSystem (EIS) 2 -Setting up the system

AC620 4.6b 2 days

EC-CS: IntegrationAC665 3 days

A

ControllingA Enterprise ControllingB Financial AccountingC

CapitalConsolidation

C

C

C

B

B

B B B

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SAP AG 1999

Prerequisites

z Required:� Understanding of the principles of consolidation

z Recommended:� SAP20 - SAP R/3 Overview� AC010 - Financial Accounting & Reporting

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SAP AG 1999

Target Audience

z Participants:� Staff of consolidation accounting departments� Project team members of the IT department

z Duration: 5 days

��This course material is not intended for self-teaching programs. The course is only complete in conjunction with the instructor’s explanations. This is why there is sufficient space for your notes.

��The exercises are only intended to be an addition to the examples that are dealt with during the course. There may not be enough time to do all the exercises during the course. In this case they can be used by participants to deepen their knowledge after the course.

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© SAP AG AC660 1-1

SAP AG 1999

z Course goalz Course objectivesz Course contentz Course overview diagramz Enterprise scenario

Introduction

Contents:

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SAP AG 1999

This course shows you how to:z Represent your corporate group using objects in the

EC-CS applicationz Use EC-CS to consolidate data for your corporate

group

Course Goal

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SAP AG 1999

Course Objective

z Define consolidation groups and unitsz Create and use a consolidation chart of

accountsz Collect individual financial statement data in

EC-CS and translate it into group currency as required

z Customizing and execute various consolidation functions

z Use standard reporting and define simple reports

By the end of this course, you should be able to :

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© SAP AG AC660 1-4

SAP AG 1999

Unit 7 Balance Carryforward

Unit 8 Information System

Unit 9 Versions

Unit 1 Introduction

Unit 2 Positioning

Unit 3 Master Data

Unit 4 Data Collection

Unit 5 Currency Translation

Unit 6 Consolidation Functions

Preface

Appendix

Exercises

Solutions

Course Content

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© SAP AG AC660 1-5

SAP AG 1999

Process Flow

Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information system

Basis: Individual financial statements in different currencies

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© SAP AG AC660 1-6

SAP AG 1999

Enterprise Scenario (1)

z Based on its economic success, the corporate group G1 decides to implement the R/3 component EC-CS by the end of this year in order to secure its market position. Corporate management wants to prepare consolidated financial statements for the end of December using the R/3 System.Experienced consultants are required in order to implement the EC-CS component in such a short space of time.Your firm is one of those trying to win the consulting contract.

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SAP AG 1999

Enterprise Scenario (2)

To receive the order, every intersted consultung firm has to produce a prototype. These prototypes are then the basis for a presentation to be presented to the steering committee of group G1. The competitors will be judged on the outcome of this presentation, and the contract for implementation of EC-CS awarded accordingly.You have been asked by the management of your consulting firm to build a prototype with a colleague within the next 5 days.

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© SAP AG AC660 2-1

SAP AG 1999

Positioning

z Enterprise Controllingz Strategic Enterprise Managementz Requirements of a consolidation system

Contents

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SAP AG 1999

Positioning - Topic Objectives

z assess the requirements of consolidation softwarez describe the functionality of EC-CS

At the conclusion of this unit, you will be able to:

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SAP AG 1999

Consolidation Steps

Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information system

Basis: Individual financial statements in different currencies

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SAP AG 1999

How can we manage our business in different countries andmarkets (act locally) and advance the group’s globalstrategy?

Executive management

?

AR

USA

MEX

D

F

EJ

Managing a Global Enterprise

��Complex group structures have to be managed effectively. At the same time, increasing globalization requires decentralized group management for independent organizational units. Business units that are close to the market have to be managed decentrally in order to leverage their full market potential.

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SAP AG 1999

AR

USA

MEX

D

F

EJ

z Management-oriented corporate structure in addition to legalstructure

z Target-based management

Executive management

Division A

Division B

Division C

Targets

Reports

America Europe/Africa Asia

Strategy - Decentralization of Responsibility

��Global process optimization allows synergies (know-how, core competencies) to be detected more quickly and used more efficiently in the group. New business concepts can be transferred from one unit to another.

��Enterprise goals are increasingly being set "from the outside" - by shareholders, for example. The executive board now has the task of implementing these goals internally.

��The corporate group head office calculates key figures and defines goals for the strategic business entities. Here, non-monetary success factors also have an influence: the group has the relevant information earlier, and no longer has to wait until effects are seen in the income statement.

��Formerly, external and internal accounting were usually separate (for example, due to different valuation methods). Nowadays, the goal is to unite external and internal accounting, since the requirements for legal consolidation also comprise a certain amount of information relevant to cost accounting. The company is managed in accordance with internal enterprise structures, which can be very detailed. This means that extremely flexible structures are necessary. Therefore, SAP Consolidation is not only based on companies.

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SAP AG 1999

Enterprise Controlling

EC-BP

Management Cockpit

Executive Board

FinancialExecutives

Enterprise Controlling

Online Info

Managers

EC-EIS

EC-CS

EC- PCA

MarketsNon-SAPNon-SAPTransaction Applications

��EC-EIS is the information system for senior management. Data from various partial information systems inside and outside of the company (Financial Information System, Human Resources Information System, Logistic Information System, Controlling, Enterprise Controlling) is grouped together to form a uniform dimension. Since this data is very heterogeneously structured, the database can be divided up into data areas that are self-contained from a business point of view.

��EC-BP: Actual/plan data, as well as investment requirements can be transferred from the transaction applications in the group, making it easier to determine planning data for the transaction units.

��EC-CS comprises general consolidation functions for external reporting, but also for the internal reporting structure in accordance with the internal management structure. EC-CS consolidates ’financial data’ from external and internal accounting. EC-EIS also imports the critical control values for enterprise controlling from the logistics and human resources applications. General key figure reports in EC-EIS are complemented by EC-CS data in a highly aggregated form. The transferred EC-CS data is displayed in EC-EIS in shared reports.

��EC-PCA provides information on profitability and capital tie-up in units that are responsible for earnings (profit centers).

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SAP AG 1999

Strategic Enterprise Management

CorporatePerformance

Monitor(CPM)

BusinessPlanning & Simulation

(BPS)

BusinessInformation Collection

(BIC)

StakeholderRelationshipManagement

(SRM)

SAP SEMSAP SEM

BW

BusinessConsoli-

dation(BCS)

� BPS: Links strategic planning and business planning

� CPM: Balanced scorecards,management cockpit and

key figure systems help anenterprise to fulfil its strategic goals

� SRM: Integrates the communication with the stakeholders

� SEM-BCS: Automates the consolidation process

� BIC: Supports the automatic acquisition of external and internal business information

��Success is measured by the speed with which a business strategy can be realized. To optimize enterprise controlling SAP has developed the New Dimensions component Strategic Enterprise Management (SEM)

��One of the main advantages of SAP SEM is the support it offers to strategic management processes by linking strategic and operational actions

��Internal control of an enterprise can be carried out using value-oriented management principles

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SAP AG 1999

SAP Consolidation - Future Development

SAP Consolidation

Engine

EC-CSConsolidation

SEM-BCSBusiness Consolidation

Value BasedManagementFunctions

R/3 OLTP Structures

fixed partiallyflexible

BW OLAP Structures

��SAP SEM is an analytical application and is based on complex OLAP and Data Warehouse technology (OLAP: Online Analytical Processing)

��The SAP consolidation engines used by both EC-CS and SEM-BCS contains all the consolidation functions. The consolidated data can be made available in the OLTP system (R/3 EC-CS) or in BW (SEM-BCS). Alternatively, reported data can in future be consolidated and analyzed in BW

��In R/3 the EC-CS structures, both fixed and flexible (user definable), continue to be available and applicable in OLTP systems. OLTP (Online Transactional Processing): The data is stored in tables and is, to a certain extent, user definable

��The Business Information Warehouse (BW) contains both the enterprise and the consolidated data This data is contained in a multidimensional data cube

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SAP AG 1999

z Internal and external group reporting / consolidation� Portrayal of any number of parallel hierarchies� Different data categories such as actual data, budget, forecast

z Complete automation of activities - even complex ones� Divestitures, transfers, changes in indirect investment, ... . .

z Comprehensive reporting

z International accounting rules� US GAAP, IAS, HGB, ... . .

Consolidation - Requirements

��Automatic creation of consolidated financial statements.

��Flexible definition of consolidation methods.

��In legal consolidation, the consolidation units are the legally independent companies. They report their individual financial statements to the group, which are used to compute the consolidated financial statement.

��In management consolidation, the consolidation areas can be profit centers or business areas.

��In the R/3 System, integrated data can be transferred directly from the transaction systems to consolidation. During data transfer, you can work with planned and budget values or execute simulations.

��The standard system includes all international consolidation methods that are commonly used.

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SAP AG 1999

Currency translation

Master data

Validation

Profit and loss Statement

123

CASales

B50

Interactive Excel

Manual posting

Drilldown reporting

Monitor

OK

ERR

Data collection• FI interface• CO interface• Layouts

• PC Data collection• Flex. File Upload• Web Access

Report WriterReport Painter

� Interunit elimination� Profit elim. in inventory� Consolidation of investments� Reclassification

Automated consolidation

MS Access

SAP Consolidation: Functionality

VersionsSimulation

Restatement

Profit and loss Statement

123

CASales

B50

Interactive Excel

��Applications of EC-CS :

• Company consolidation

• Management consolidation

��Characteristics:

• Flexible hierarchies of consolidation units

• SAP integration for companies, business areas, profit centers

• Tools for online and offline data entry: Online data entry for non-integrated consolidation units MS ACCESS PC data entry program for subsidiaries without SAP software Flexible upload for data from external systems or via Web Access

• Status monitors for data collection and consolidation

• Powerful reporting functionality, drilldown to transaction SAP components

• Interactive Excel link to consolidation database for reporting.

• International rules for reporting (US-GAAP, IAS)

• Versions for data categories, simulation, planning

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SAP AG 1999

CO - PACO - PA

HRHR

Cost CenterOrderProject

P&L Accountsand CO Object

Balance Sheet AcctsSDSD

MMMM

BPBusinessPlanning

EISExecutive

InformationSystem

EC-CS ConsolidationDimension

FI DataConsolidation Unit =Company / Business

Area

PCA DataCU =Company /Profit Center

EC-PCAProfit Center AccountingProfit Center, Company Code

CO ControllingFI-GL General Ledger � Assets� Receivables� Payables

� Assets� Receivables� Payables

� WIP� Inventory� Other

� WIP� Inventory� Other

Integration of EC-CS Consolidation

��EC-CS is integrated with other SAP applications in two ways:

• Applications which handle day-to-day business transactions transfer data to EC-CS in summarized form. Consolidation reporting supports a drilldown back to these applications.

• Consolidated data is transferred to the EIS (Executive Information System), which collects highly summarized data from all enterprise areas (including Logistics and Human Resources) for one company or the group as a whole.

��EC-CS supports the consolidation of any "consolidation units", providing the required financial data is supplied. Through SAP integration, data can be made available for the consolidation of companies (legally independent units), business areas (subdivisions of companies for the purpose of external segment reporting), and profit centers (areas of responsibility inside or across companies).

• If the transaction applications and the Consolidation system are all in the same client of the same system, data can be transferred to the Consolidation system online (in realtime). Additionally, data can be transferred by periodic extract or rollup from non-SAP systems.

��The integration of EC-CS with CO-PA is planned for a later release.

Page 24: AC660 ECCS

© SAP AG AC660 2-12

SAP AG 1999

Unit Summary

z Assess the requirements of consolidation softwarez Describe the functionality of EC-CS

You are now able to:

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© SAP AG AC660 3-1

SAP AG 1999

Master Data

z User interfacez Consolidation unitsz Consolidation groups and hierarchiesz FS itemsz Subitems

Contents

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© SAP AG AC660 3-2

SAP AG 1999

At the conclusion of this unit, you will be able to:

z work with the EC-CS interface

z define consolidation units and groups, in order torepresent the structure of your corporate group inthe SAP R/3 system

z work with the EC-CS consolidation chart of accounts

Master Data - Topic Objectives

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SAP AG 1999

Consolidation Steps

Create master dataCreate master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information System

Basis: Individual financial statements in different currencies

Page 28: AC660 ECCS

© SAP AG AC660 3-4

SAP AG 1999

Master Data - Business Scenario

z The group G1 plans to introduce the component EC-CSof the R/3 System by the end of this year.

z Corporate management wants to prepare consolidatedfinancial statements for the end of December using theR/3 System.

z Group G1 requires support from experienced SAPconsultants. The management of your company createsa prototype for a presentation to be presented to thesteering committee of group G1.

z The competitors will be judged on the outcome of thispresentation, and the contract for implementation ofEC-CS awarded accordingly.

z You have been asked by the management of yourconsulting firm to build a prototype with a colleaguewithin the next 5 days.

Page 29: AC660 ECCS

© SAP AG AC660 3-5

SAP AG 1999

Master Data - Consolidation Charts of Accounts

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SAP AG 1999

z Global session parameters per user

z Access to many transactions from hierarchical displays

z Identical presentation techniques for all lists, includingdrilldown functionality (list processor)

z Use of standard SAP tools� Planning processor� Validation� Report Writer / Painter� Drilldown Reporting

z Multi-level Customizing keeps unneeded functionsout of sight

User-Friendly Interface

��Global parameters are important settings for EC-CS that typically remain the same for a work session.

��Both the enterprise structure and the consolidation chart of accounts used are built up in a multi-level. Example for item hierarchies: Income statement, cash flow statement

��With the help of the list processor, you receive clearly arranged lists, whose displays you can explain in stages (Drilldown).

��The SAP standard tools are used in EC-CS as follows:

• You can structure the data entry layouts with the planning processor

• Validation rules check the consistency of transferred data, as well as the accuracy of the currency translation and the consolidation activities.

• You can create reports quickly and simply and evaluate any data with the Report Writer/Painter and drilldown reporting tools.

��Unneeded Customizing functions are hidden. Example: When you select the accounting technique, purchase method, further configuration settings for the equity method are hidden.

Page 31: AC660 ECCS

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SAP AG 2001

Global Session Parameters

Cons groups FS items Data monitor Cons monitor Info system Parameters

Global parameters

Dimension 01 LegalCons group __Cons unit __Version 100 Actual dataYear 2000Period 012

Cons C/A 01 US C/ALedger US USD

EC- CS menu

Parameters

��Global parameters are important settings for EC-CS that typically remain the same for a work session.

��These parameters are saved for a particular the user when he/she logs off, and are automatically used when he/she logs back on. However, the parameters can be changed as and when required.

��When you run a function, the information saved as a your global parameters are either proposed by default, or set in the background (in which they cannot be specified directly for the function).

��The global parameters are displayed in a status row at the top of every screen in Customizing and the consolidation functions.

��In Customizing, the parameters that are relevant for the current maintenance are displayed in a different color. For example, maintenance of financial statement items is dependent on the consolidation chart of accounts, but not on the version.

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SAP AG 1999

Hierarchical Displays

Cons groups FS items Data monitor Cons monitor Info system Parameters

I/S

Carryfwd

. . .

US Chart Accts

B/S

Cur.assts

Fxd assts

Equity

Liabilities

EC-CS menu

World

America

USA

Canada

Europe

Asia

. . .

Status

USA

Canada

Europe

Asia

. . .

Report tree

I/S

Cur./prior yr

Periods

Region

. . .

. . .

America

World

B/S

Funct. area

��You can access all functions from the EC-CS application menu.

��Within these hierarchies, you can perform such functions as maintain master data, start and monitor data collection and consolidation functions (monitors), and generate reports.

��Many complex functions (such as the entry of additional data for consolidation of investments, and the assignment of consolidation of investments methods) also use hierarchical displays with simple navigation.

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SAP AG 1999

The EC-CS List Processor

Consolidation ofConsolidation of Investments Investments

Dimension 01 Legal Version 100 Actual Period 012 / 2000

Consolidation of Investments Document Type 51

Investment 80.00Equity

Item250100250400

Common StockPreferred Stock

5,0004,800

Group 4,000 800

01,200

Minority 1,000 200

Expand Collapse Position Filter Search

Cons Group Currency

CG2 Europe USD

Investee UnitC/I Activity

First consolidation 4711 0,00 80,00

Activity No.

C2000 United Kingdom

5,0006,000Total5,0001,000

��The list processor is a reporting tool available in EC-CS only. It is used for displaying and printing information, and for interactive drilldown reporting from a generated list.

��The expand and collapse functions in the list header can be used for all the areas in the main body of the list. You can drill down step by step or skip levels.

��The expand and collapse function in the main body also enables you to drill down step by step or skip levels.

��F1 Help is available for all fields in the list header and the main body of the list.

��You can use the filter function to restrict the list to certain characteristic values, for example, if you have run interunit elimination for the entire consolidation group and only want to see the results for one consolidation unit in special.

��The report-report interface enables you to access other reports in EC-CS Consolidation. Several links are predefined, others can be defined by users.

��The search function is identical to the standard SAP list search. A special function is available for searching for error messages. The date and time are added when a list is printed. A function to define page breaks is available as well.

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SAP AG 1999

Master Data - Organizational Units

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SAP AG 1999

Consolidation Units and Groups

Dimension: Company consolidation

Germany

EuropeParent

Asia Parent Central Europe

Parent...ChinaJapan

Cons unit

Cons group

Hierarchy: Group by investments

Asia-Pacific

World

��Dimensions are specific views on group reporting. They include consolidation types such as company consolidation, business area consolidation, or profit center consolidation.

��In a dimension, you define the group structure as a hierarchy of consolidation units and groups. You can manage several dimensions in parallel in the system.

��The company forms the basis for the generation of consolidation units.

��The consolidation unit is the smallest element of the group structure for which a complete consolidation can take place.

��The business object consolidation group is a user-defined group of consolidation units created for consolidation and reporting purposes.

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SAP AG 2001

Group

Company

Segment

Group by companies

Hierarchy 1

Company/Segment

Group by segments

USA / Non-Food USA / Food

Hierarchy 2

Food . . .

France USA . . .

Non-Food

Dimension: Business area consolidation

Group

Company

Strategic business unit

Companies

Hierarchy 1

Company/SBU USA / Non-Food USA / Food

Hierarchy 2

Food . . .

France . . .

Non-Food

Dimension: Business area consolidation

SBU: Strategic business unit

Parallel Hierarchies

Consolidation business units

USA / Non-Food USA / FoodFrance / Food USA / Food

USA

��In a dimension hierarchies are structured sets of consolidation units and consolidation groups. They are defined by their top-most consolidation group. Thus, a given dimension can represent one or more consolidation types.

��Any consolidation unit or group can exist in any number of hierarchies.

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SAP AG 1999

Variable Hierarchy Depth

Group by Group by strategic unitsstrategic units

CO 2/PC 3211

BA 5BA 5 BA 7BA 7. . .. . .

SBU BSBU B SBU CSBU C

. . .. . .

SBU ASBU A

BA 3BA 3 BA 4BA 4

DIV 33DIV 33DIV 31DIV 31 DIV 32DIV 32

PC N321PC N321 PC N322PC N322

PC 3211PC 3211 PC 3212PC 3212

CO 9/PC 3211

DIV 72DIV 72DIV 71DIV 71

PC N712PC N712PC N711PC N711

PC N711 BPC N711 A

PC 7112PC 7112PC 7111PC 7111

CO 2/PC 7111

CO 9/PC 7111

Dimension:Profit center consolidation

SBU: Strategic business unit PC: Profit Center

BA: Business area CO: Company

DIV: Division

��You can create any number of hierarchy levels.

��The number of hierarchy levels can vary in different branches of the same hierarchy.

��In the above scenario with data from EC-PCA, consolidation units are combinations of company and profit center.

��When you use the consolidation with integration to Profit Center Accounting, then you generate the consolidation units and groups from the organizational units of operational applications.

• The consolidation groups are derived from the profit centers and the hierarchy nodes, the consolidation unit is formed from the profit center and the company.

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SAP AG 1999

Ledger

Totals tableECMCT

Ledger

US

Cons

unit

FS item TC ... Valuein LC

Valuein GC:USD

Quantities

Ledger US

Ledger EU

Ledger

EU

Cons

unit

FS item TC ... Valuein LC

Valuein GC:EURO

Quantities

Æ defines the structure of the ledger

Æ Ledger currency determines group currency

$Version 100

Version 200

��Contains transaction figures and documents showing the changes in the values and quantities resulting from accounting transactions. The values of transaction figures are saved in 16 periods as well as in one period for the balance carried forward. You assign a ledger to each consolidation group in the master record of the consolidation group.

��The data in the ECMCT totals table can be managed in three currencies:

• Transaction currency

• Currency of the consolidation unit

• Ledger currency. The ledger currency specifies the currency of the consolidation group.

��Example: You want to consolidate two consolidation groups in USD and EURO. You need two ledgers for this. At group level you copy the values from the EURO ledger into the USD ledger.

��SAP delivers the standard ledger "1C" for consolidation. This ledger is not for use in a live customer system. Please create a new ledger (using ledger "1C" as a copy template).

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SAP AG 1999

Versions

�Receivables / payables(Foreign currency valuation)

�Tangible fixed assets(Depreciations)

�Material stocks

�Openorders(Long-termproduction)

IAS Version

Local

Adj. EU

Elim.

Group

Local

Adj. US GAAP

Elim.

Group

Trade Law

Trade Law GroupGroup EUEU

Trade Law

Trade Law GroupGroup US GAAPUS GAAP

Trade Law (local)

Tax LawTax Law ((locallocal))

US GAAP VersionEC-CSEC-EC-CSCS

FI-APFI-FI-APAP FI-

ARFI-FI-ARARFI-

AAFI-FI-AAAA

MMMMMM

PSPSPS

COCOCO

ECMCTECMCTECMCT

Totals Database

��Valuations can differ depending on whether they are carried out from the point of view of local trade law or for the corporate valuation of the group data.

��In Consolidation the versions serve to maintain separate datasets in the consolidation database so that alternative consolidations can be managed. This means that various data categories (such as actual, plan, and budget data) can be maintained and consolidated.

��You can also carry out simulations, for example on the basis of different exchange rates or changes in the group structure.

��A consolidation version is composed of special versions. These are methods and tasks that cover the various areas of consolidation. This enables you to define various consolidation versions that differ only in one or a few areas, but otherwise refer to the same special version (see also the unit Versions).

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Consolidation Group, Ledger, Version

USA

Germany Canada

USA

Germany Canada

Version 200Version 100

ECMCT

Totals database

Ledger in EURO Ledger in USD

$

��You assign a ledger to each consolidation group in the master record of the consolidation group.

��The system saves the assignment in a special ledger version. This means that you can assign different ledgers, and therefore different consolidation group currencies, to a consolidation group in different consolidation versions (see the unit Versions).

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Consolidation Unit

Dimension Cons chart of accts Version Period /

Hierarchy

Consolidation group

Cons group

Dimension

...

• Local currency

• Data transfer• Upload

• Name• Address• Telecommunication

• K3 Form• Attributes, for example

type of cons unit

01

Cons unit

Methods

Correspondence

Attributes

Master Data

• Currency translation• Validation• Data entry• Posting

Data Collection

��The consolidation unit is the smallest element of the group structure for which a complete consolidation can take place.

��This Business Object is dimension-dependent and can have different characteristics (company, business area within a company, profit center within a company, and so on).

��Some of the master data and control parameters are valid only in conjunction with other data. The local currency and the financial data type, for example, are dependent on the fiscal year effective, and the translation method is dependent on the translation version.

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Consolidation Group

Dimension Cons chart of accts Version Period /

01 Dimension

Hierarchy

Consolidation unitCU A

Consolidation groupG1

Description

Consolidation groupCG G2

01 Dimension

...

• Consolidation frequency

• Ledger assignment

• Data entry

• Posting

• Currency translation

Assignments

Methods

Correspondence

Master Data

• First inclusion of the unit/group in consolidation

• Parent unit

• Name

• Address

• Telecommunication

��A consolidation group is a user-defined combination of multiple consolidation units and/or consolidation groups for consolidation and reporting purposes. It represents the structure of the group.

��Consolidation groups and consolidation units are dependent on the dimension.

��Each consolidation unit can be included in different consolidation groups, and each consolidation group in turn can be included in different hierarchies.

��Since consolidation groups are dimension-dependent, the master data created for the consolidation groups is valid only in the relevant dimension.

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Master Data - Consolidation Charts of Accounts

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Consolidation Charts of Accounts

DimensionCompany

consolidation

DimensionProfit center

consolidation

DimensionBusiness area

consolidation

Chart: Germany with appropriations in I/S

Chart: Germany with appropriations in B/S

Chart: US GAAP

Chart ...

Generalledger

accounts

Secondarycost

elements

Transactionchart

of accts

COCOControllingControlling

Non-SAPcharts of

accts

FIFIFinancialFinancial

AcctgAcctg

EC-CSEC-CS

��In order to create consolidated financial statements, the transaction data of all the consolidation units included must be uniformly aggregated. For this purpose, the group headquarters provides all consolidation units with one or more consolidation charts of accounts. These charts of accounts structure the financial statement items in accordance with the internal and external requirements of the consolidated financial statements. In the consolidation chart of accounts, all financial statement items are arranged logically in an item hierarchy.

��The consolidation chart of accounts is client-dependent only. Therefore, you can use it in different dimensions.

��To allow the integrated transfer of reported financial data from SAP transaction applications, you must create a link between the G/L accounts and any secondary cost elements, and the consolidation financial statement items. When realtime updating or rollup is used, the ID’s of the transaction accounts are identical to the ID’s of the FS items. When periodic extract is used, the financial statement version items and the consolidation items are identical. In order to ensure that the IDs correspond, you can create the consolidation chart of accounts from both the FI chart of accounts and the financial statement version.

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Financial Statement Items and AccountAssignments

Dimension Cons chart of accts Version Period /

Consolidation chart of accounts

Item hierarchy

Value item

Totals item

0101

...

Subitem Partner Currency Acquisition yr

Specifications

FS Item 191500

FS item type

Sign for entry

Contra item

Where-applied indicator

Item category

Consolidation itemAppropriation item

1000

Attributes

Value itemTotals item

Text item

Asset itemLiability/equity itemIncome statement itemStatistical item

Debit (increase)Credit (decrease)

Technical Settings

Block posting and entry

Breakdown category Transaction type

Assets

x x

x

��The FS item is the central account assignment object of the consolidation system. It identifies a value or quantity entry and can be differentiated with further subassignments.

��The FS item type puts the characteristics of an item in concrete terms, with regard to data entry, posting and processing in evaluations. The following FS item types are distinguished: values, totals and text items.

��Where-applied indicator: Here you define whether the FS item belongs to the assets, liabilities/equity, income statement or statistical items.

��The FS item type can be defined by the user, for example, in order to select items specially as key figure items.

��The breakdown category determines which subassignments should be managed.

• Fixed values for subassignments can be necessary, like, for example the assignment of partner units with receivables and payables items, in order to execute the elimination of IU receivables and payables.

• In the above example, the breakdown category ’1000’ for asset transactions defines a transaction type as a necessary subassignment.

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Subitems

Accounting document FI

EC-EC-CSCS

FS itemSubitem categorySubitem

Fixed assetTransaction typeDivestiture

The use of subitems depends on the FS item.

Net sales Country Germany

ExpenseFunctional areaSales

FS itemG/L account Subitem

EC-PCAEC-PCA

Business area FI-GL account Cost center

Transaction type Functional area Customer’s country

Subitemcategory

��Subassignments keep the number of items in consolidation charts of accounts down to a manageable level. It may, for example, be necessary to additionally assign financial statement items in transferred assets with different transaction types so that all changes to the items are shown from the opening to the closing balance. The subitems are grouped into subitem categories, in order to distinguish the transaction types in transferred assets from those in equity, for example. Only one subitem category can be assigned to a particular financial statement item in EC-CS. Default subitems are provided for each of the subitem categories in the consolidation charts of accounts supplied with the system.

��Other standard subassignments are partner, currency and acquisition year/period.

��The breakdown type determines whether the FS item value should be expanded when entering and posting to this subassignment and how the system should check the respective subassignment, for example: required breakdown: value entry was forced, default value allowed.

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Structuring Data - Characteristics

CharacteristicsCharacteristics

Organizationalunit FS item

Othercharacteristics

SubassignmentsSubassignments

AttributesAttributes

Globalparameters

��In the Consolidation database, SAP delivers a large number of predefined characteristics. They are used for structuring your data, above all transaction data. For that reason the most important characteristics are the key fields in the transaction databases. If you require further subassignments, you can create your own characteristics.

��As attributes, the characteristics can describe the consolidation unit in more detail. You can create characteristics to break down items, which structure the transaction data. You can define your own characteristic hierarchies and evaluate them in drilldown reporting / Excel reports. For example, you can reproduce a hierarchy of products for the item net sales.

��Definition of custom characteristics:

• In the Consolidation database, you can add characteristics, which are based on structures that already exist in the SAP system (for example, region). Then you receive a list of components, that let you maintain the characteristic values, and you can go to these IMG activities. For every custom subassignment, that you create with a new validation table, you can load the values into the system by means of flexible upload.

• You can add characteristics, whose structures have to be regenerated (for example type of company). The system then generates the necessary ABAP Dictionary objects and maintenance views.

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Characteristic Consolidation Unit - Attributes

Type of company

z Sales/Marketing company

z Manufacturing company

z Financial institutions

z Legal form

z Auditing firm

Consolidation unitConsolidation unit

AttributesAttributes

Master data

Correspondence

Methods Datacollection

Type of company:

Sales/Marketing co.

Interunit elimination

��You can use attributes to define additional information about the consolidation unit. This characteristic summarizes the consolidation units in reporting in different groupings.

��SAP delivers, as attributes for the consolidation unit, the following characteristics: country, company, consolidation business area, profit center, controlling area. They are useful when you transfer the reported financial data of your integrated consolidation units.

��You can add navigation attributes to the characteristic consolidation unit. The system automatically assigns the characteristics partner unit and investee unit to the attribute.

��Interunit elimination: You could restrict the values to be selected to certain consolidation and partner units. For example when you divide your consolidation units into manufacturing companies and financial institutions, then you could restrict the elimination to a type of company, in order to study the elimination differences separately.

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Subassignments of the Financial Statement Item

FS itemFS item type

...

1

Inventory

Breakdown category ####

Product groupProduct group RegionRegion ......CustomCustom

characteristiccharacteristic

CountryCountry

Region Region Alsace Alsace only only validvalid in in France France!!

SubitemSubitem PartnerPartner CurrencyCurrency Acquisition yrAcquisition yrStandardStandard

specificationspecification

• Default values

• Compound of characteristics

��Along with the standard subassignments you can define your own subassignments as characteristics and assign an item.

��For every account assignment you can define a breakdown type within a breakdown category. When a subassignment is missing, the breakdown type determines whether a default value is set. You can define default values for the following characteristics: partner unit, subitem, custom characteristic, for which you have set a default value when defining the indicator.

Example: Enter which default partner unit should be set, when the account assignment information on the partner unit is missing, for example with the realtime update of reported data.

��Compound of characteristics: A region, for example, can only be maintained or interpreted together with a country’s data . In such a case you would create two custom subassignments and assign them to each other.

��Custom characteristics extend the database of Consolidation. SAP recommends that you activate and generate the new characteristics, when you have completed creating the characteristics, and are sure that you want to work with this database. In this way, you avoid time-consuming deletion actions. Note that deleting a characteristic is no longer possible, when you have already posted data with this characteristic.

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Consolidation Database - Structure

z Acquisition year/per (4,3)

z Flags: Translation, proportion(1,1)

z Transaction currency (5)

z Unit of measure (3)

z Custom characteristics

z Dimension (2)

z Ledger (2)

z Version (3)

z Year, period (4,3)

z Cons unit (18)

z Cons C/A (2)

z Item (10)

z Subitem cat. (3)

z Subitem (10)

z Partner CU (18)

A

B1

C

D

B2

z Document type (2)

z Cons group (18)

z Transaction currency

z Local currency

z Group currency

z Quantity

��These are the most important fields in the EC-CS totals database.

��The first 5 fields in block A store the business unit whose data is collected and processed (dimension, consolidation unit), the collection period (year, accounting period), the data category (version) and the consolidation group currency (indirectly from the ledger field).

��You can use multiple ledgers in EC-CS to achieve greater flexibility in your use of group currencies.

��The fields in blocks B1 and B2 store the consolidation chart of accounts, the financial statement item and all additional account assignments that can occur in the data collected in EC-CS. The fields Document type and Cons group in block C are only used for posting transactions within EC-CS.

��The last 4 fields (block D) store up to three currency amounts and a quantity for totals records. In addition, the database contains a balance carried forward field and 16 period fields.

��The totals database is flexible. You can add fields to the additional account assignments (block B2) predefined by SAP.

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Selected FS Items

Machinery MA

APC 20,000 DEP 5,000-

(1) 1,000

Alloc. Def. Taxes (DTX) Ret. Earn. (I/S) (REI)

SL 5,000

Tax Expense (TXE)

(2) 600-

Ret. Earn. (B/S) (REB)

SL 5,000-

(3) 400- (3) 400 (2) 600

2.400

B/S

MA 15,000

REB 5,000(1) 1,000

EQ 20,000

(2) 600

REC 10,000

DTX

(3) 400

25,000 25,000(1) 1,000 (2+3) 1,000

26,000 26,000

I/S

DEP 5,000

TXE

SL 10,000

REI 5,000

(1) -1,000

(2) 600

(3) 400

I/SB/S

Expense from DEP

5,000

(1) 1,000-

Individual FS:Depreciation 5000(Useful life 4 yrs)

Consolidation:Depreciation 4000(Useful life 5 yrs)

(1) manual depr. adjustment 1000

Automatic Postings:

(2) deferred income tax 600

(3) retained earnings 400

EC-CSEC-CS

��To create automatic postings the system requires information about certain financial statement items, for example, for posting financial statement balancing adjustments and deferred taxes.

��All special items (in this example, the items retained earnings in the balance sheet/income statement, allocation of deferred taxes in the balance sheet, and tax expense in the income statement) are dependent on the chart of accounts and the relevant consolidation version.

��The example shown is a depreciation adjustment. The following assumptions were made:

• The individual balance sheet corresponds to the tax balance sheet.

• The consolidated balance sheet corresponds to the commercial balance sheet.

• The useful life of the machine is 4 years for the consolidation unit and 5 years for the cons group.

• The tax rate is 60%.

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Master Data - Unit Summary

z work with the EC-CS interfacez define consolidation units and groups, in order to

represent the structure of your corporate group in theSAP R/3 system

z work with the EC-CS consolidation chart of accounts

You are now able to:

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Master Data Exercises

Unit: Master Data Topic: Organizational units

After completing these exercises, you will be able to:

• Define the global parameters

• Check the global system settings

• Create master records for consolidation groups/consolidation units

• Define a consolidation group hierarchy

• Insert master data in a hierarchy

The group G1 plans to introduce the component EC-CS of the R/3 System by the end of 2000.

Corporate management wants to prepare consolidated financial statements for December 2000 using the R/3 System.

Group G1 requires support from experienced SAP consultants. The management of your company creates a prototype for a presentation to be presented to the steering committee of group G1.

The competitors will be judged on the outcome of this presentation, and the contract for implementation of EC-CS awarded accordingly.

You have been asked by the management of your consulting firm to build a prototype with a colleague within the next 5 days. Structure of corporate group G1:

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1-1 Define a dimension using the code XY.

XY = 50 + your group number

Example: Group 14 uses dimension 64.

What you enter:

• Short and medium text for the dimension:

• Dimension XY

• Consolidation unit / consolidation group: Field length 3.

• Define all output fields for the consolidation units and groups as optional in the screen selection settings.

1-2 Ledger:

You are creating consolidated statements in the currency USD and will be using ledger US (already created).

Find out which currency is used in standard ledger 1C.

Check that the ledger currency of this ledger matches that used in your prototype (US).

1-3 Define the global session parameters:

• Dimension XY (see section 1-1)

• Ledger “US” in USD

• Actual version 100 (provided in the standard system)

• Period 012, year 2000

• (Group G1 will consolidate in the implementation year––period 012/2000––using the SAP component EC-CS.)

• Chart of accounts XY (where XY = 50 + your group number), which has already been defined by your colleague.

1-4 Define hierarchy H1 for statutory consolidation.

1-4-1 Assign the consolidation groups (CGs) and consolidation units (CUs) A-E to this hierarchy as required, using the information on the structure of corporate group G1, as provided by the steering committee.

1-4-2 Create consolidation units A, B, C, D and E:

Consolidation unit A belongs to CG G1; Consolidation units B-E belong to CG G2.

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1-4-3 The steering committee has provided you with the following information to help you create master data:

• Enterprise Structure - CU A, B, C, E: Corporate office USA - CU D: Corporate office Germany - Local currency: the country’s currency (Note: Country currency for Germany: UNI !).

- CU A: Parent company of CG G1 - CU B: Parent company of CG G2.

(Note: To locate the parent indicator, in the master data record of the CG go to Assignments tab.)

• Data Transfer Methods

- Consolidation units B, C, D, and E do not use an SAP System, and therefore report their financial data by sending an MS Excel file to the corporate office.

- Consolidation unit A sends its data on paper to the group headquarters, where the data is entered manually.

• Fiscal year variant

- All units use a fiscal year (FY) variant, which consists of a calendar year and 4 special periods (K4).

(Note: You define the FY variant in Consolidation Group Maintenance by selecting Gotoo FY variant).

• Consolidation frequency

- Consolidation groups G1 and G2 disclose consolidated statements at the end of each quarter.

• Generate sets before exiting the hierarchy.

1-5 Navigating in and changing a hierarchy: Demonstrate the navigation within the new hierarchy:

• Fully collapse the hierarchy and use the search function to find cons unit A.

• Focus the hierarchy display on cons group G2 and then back on G1.

1-6 Create a “dummy” default partner unit for your dimension:

A default consolidation unit must be established for each dimension. This default CU is required for the data collection task (Unit 4) and the Consolidation of Investment task (Unit 6) to be successful.

• Create a new consolidation unit “999” by copying consolidation unit “999999” from dimension 50. This will be used as a default partner unit for your dimension

• Assign this new consolidation unit “999” to your dimension as the default partner unit.

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Master Data

Unit: Master Data Topic: Consolidation Chart of Accounts

After completing these exercises, you will be able to:

• Use financial statement items and FS item hierarchies

2-1 Master data for the consolidation chart of accounts:

Check the definition of the master data for chart of accounts XY (XY = 50 + your group number).

2-2 Changing item 311200:

2-2-1 Correct the totals item:

While checking the master record of the item Insurance Expense, you discovered that the item is not defined as a totals item.

2-2-2 Creating value items:

Create the related value items, Building Insurance Expense and Other Insurance Expenses.

(Note: Find this item by navigating in the hierarchy.)

2-3 Maintaining financial statement (FS) items:

When presenting your prototype, you will outline the FS item hierarchy and the content of an FS item master record.

Explain the following terms using the item Machinery and Equipment as an example:

• Breakdown category

• Subitem category

• Default subitem

• Subitems

When you exit the FS item hierarchy, generate sets.

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The example includes the following selected items used for postings:

- Creation of automatic line items; for example, the modification of the annual net income item in the balance sheet and the income statement when financial statement imbalances occur.

- Posting of deferred income taxes

Your colleague was not aware that this function existed.

2-4 Define the following selected items and explain them at the same time.

What you enter:

Annual net income B/S item 251200 (debits/credits) subitem category 6 subitem 120 (debits/credits)

Annual net income I/S item 390000

Deferred income tax : (B/S item) 150100 (debits) 225100 (credits)

Deferred income tax: (I/S item) 350100 (debits)

350100 (credits)

Other items tab: Retained earnings carried forward

251100 subitem category 6 subitem 120

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Master Data Solutions

Unit: Master Data Topic: Organizational units

1-1 Defining a new dimension:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Define Dimensions o Create Dimension Enter a name for your dimension and do not use another dimension as a template.

Choose Enter. On the Dimension Create screen, enter Dimension XY in the Short text and Medium text fields.

Substitute XY with 50 + your group number.

Enter 03 in the fields Length of consolidation unit and Length of consolidation group.

Choose Screen selection CU and Screen selection CG to go to the following detail screens. Enter 1 for all the fields to specify that they are optional.

Save your entries.

1-2 Ledger:

Both Ledger “ 1C” and Ledger “ US” use the currency USD. To view the ledger definitions, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Currencies o Define Ledgers o Display Ledger

Since ledger “ US” uses the currency USD, you do not need to change any settings because you also want to use the ledger currency USD for your prototype.

1-3 Session parameters:

To set your global parameters, you choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Define Global Parameters

Alternatively, you can choose Global Parameters in the initial Consolidation application screen.

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Enter the following:

Field/Data Type Value

Dimension

Version

Year

Period

Cons chart of accounts

Ledger

XY (XY = 50 + your group number)

100

2000

12

XY (XY = 50 + your group number)

US

1-4 Defining a consolidation unit and consolidation group hierarchy H1

This solution for this section consists of twelve (12) distinct steps. These steps will answer 1-4-1 to 1-4-3

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Organizational Units o Consolidation Groups o Maintain Hierarchies o Maintain Consolidation Group Hierarchy o Choose

Alternatively, you can choose Master Data oConsolidation groupsoHierarchyoMaintain in the Consolidation application screen.

1. Place your cursor on the dimension and choose Create or the menu item: Cons group hierarchy → Create.

Enter H1 in the Hierarchy field and H1 group XY in the Description field (XY is your group number + 50). Choose Continue.

2. Place your cursor on the hierarchy node that you have just created, and choose Create (or use the menu path). Create the top cons group G1 with the description CG G1, and choose Continue.

3. Now select the top cons group G1 and choose Create.

In the Selection Unit or group dialog box, add A to the hierarchy by entering A under Cons unit and entering a medium text. Under Create new org units as master data select the indicator Cons unit. Select Continue.

4. After creating cons unit A, place your cursor on G1 again, and choose Create to add the cons group G2 to the hierarchy.

In the Selection Unit or group dialog box, add G2 to the hierarchy by entering G2 under Cons unit and entering a medium text. Under Create new org units as master data select the indicator Cons group. Select Continue.

5. Place your cursor on G2 and define the consolidation units for group G2 by choosing Create.

In the Selection Unit or group dialog box, add B,C,D, and E to the hierarchy by entering B,C,D, and E under Cons unit and entering medium texts. Under Create new org units as master data select the indicator Cons unit. Select Continue.

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6. In master data maintenance, double-click cons unit A in the hierarchy and make the following entries in the appropriate fields:

Field/Data Type Value Short and medium text Country Language Local currency

Cons unit X (substitute X with the corresponding unit A, B, C, D, or E) US (for units A, B, C, and E) DE (for unit D) EN (for units A, B, C, and E) DE (for unit D) USD (for units A, B, C, and E) UNI (for unit D)

7. Choose the Correspondence tab to add more detail for cons unit master data.

Field/Data Type Value

Names 1 and 2

Street

City

Cons unit X (substitute X with the corresponding unit A, B, C, D, or E; the same applies to Street and City.)

X Street

X City

8. Choose: Goto → FY variant.

9. In the screen Change View “ Fiscal Year Variant Assignments”: Overview, choose New entries and enter the ledger US and fiscal year variant K4 for each consolidation unit and group.

Save your entries and choose Exit to return to the Consolidation group hierarchy Change screen.

10. Choose the Data Collection tab to enter the data transfer method. Save your entries before exiting.

• Data transfer method: Flexible Upload (for cons units B, C, D, and E) and Online Data Entry (for cons unit A)

11. Now put your cursor on cons units B-E, double-click, and maintain the master data for B,C,D, and E in the same way, as listed in steps 6-10 above.

12. Maintain the master data for cons groups G2 and G1.

Put your cursor on the group that you want to edit in the hierarchy and double-click to go to the master data.

You navigate within and between the individual detail screen as with the cons units.

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Enter the following:

Field/Data Type Value

Master Data:

Cons frequency

Country

Language

Ledger

Names 1 and 2

Street

City

Parent indicator (PU)

4

US

EN

US

Consolidation group G1 and G2

G1 Street and G2 Street

G1 City and G2 City

use A for G1 and B for G2

Parent indicator: You can find this indicator by choosing the Assignments tab on the Consolidation group hierarchy Change screen

When you have finished maintaining the master data and have saved, you need to generate sets for Report Writer reports before exiting the hierarchy. Select the Generate sets icon on the icon bar.

1-5 Navigating in and changing a hierarchy:

Go back to Maintain Consolidation Group Hierarchy.

• To collapse an entire hierarchy, click on the Collapse level icon on the icon bar.

You can find a CU or CG using: Edit o Find and entering the unit or group concerned.

To go to G2 in the hierarchy choose: Edit o Set focus (or click the corresponding icon) after positioning at G2.

Select XY\H1\G1 in the header of the list screen to return to initial view of hierarchy.

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1-6 Creating a dummy default partner unit:

Defining a default partner consolidation unit

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Organizational Units o Consolidation Units o Maintain consolidation units individually o Create Consolidation Unit o Choose

Enter “999” for Consolidation unit and Copy from Dimension 50, Consoidation unit “ 999999” . Save.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Financial Statement Items o Subassignments o Define default values for subassignments o Change default values o Choose

On the line Partner unit, click on Dflt values button. Find your dimension ## (50 + your group number) and Enter cons unit “ 999” in the Default value for Partner field. Save.

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Unit: Master Data Topic: Consolidation Chart of Accounts

2-1 Master data for the consolidation chart of accounts:

To display cons chart of accounts master data, you choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Financial Statement Items o User-Defined consolidation Chart of Accounts o Maintain Item Hierarchies for cons Chart of Accounts o Edit Item Hierarchies o Choose

Menu Path: Alternatively, you can choose Master Data oFS items oHierarchyoMaintain in the application screen. Go to the chart of accounts master data by double-clicking on the chart of accounts at the top of the hierarchy display

You can see that your chart of accounts allows for an output length of 6 characters for its FS items, and that retained earnings are recorded in the balance sheet. Select Back to return to the hierarchy.

2-2 Changing item 311200:

In the item hierarchy, you can go to the item’s master data by selecting the income statement item Insurance Expense (311200).

Menu Path: Node IS o Net Income o Net Income before minority interest o Income from continuing operations o Income before taxes o Operating Income o Operating expenses

2-2-1 Double-click 311200. On Attributes tab, instead of FS item type Value item, choose item type Totals item, and save your change.

Leave your cursor on the totals item 311200 and choose Create.

Enter the two new items, for example 311201 and 311202 with the item texts: Building Insurance Expense and Other Insurance Expense, respectively.

Maintain FS item master data for 311201 and 311202. Save.

Save your entries and generate sets (by choosing the Generate sets icon) when you exit the hierarchy.

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2-3 Maintaining financial statement (FS) items:

In the item hierarchy go to node BS:

Menu Path: BS o Total Assets o Total Fixed Assets o Property, Plant & Equipment, Neto Property, Plant & Equipment o Machinery and Equipment (191500).

The breakdown category 1000 (Attributes tab) and subitem category “ 1” (Subassignments tab) has been assigned to the item.

The set of subitems CS01-1000 has been assigned to subitem category “ 1” .

2-4 Selected items for posting:

Selected items are maintained in Customizing.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Financial statement items o Specify selected items for posting If there are no selected items specified for your example, choose New entries and enter selected items as listed in the Exercises section of this unit (2-4).

Otherwise review that the selected items are the same as those listed in the Exercises section . Check that all subitems are properly assigned.

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z Data recordsz Status managementz Data collection methodsz Validationsz Posting

Contents

Data Collection

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z apply different data collection procedures andknow when to use them

z execute standardizing and consolidation entries

z define selected items, in which automaticpostings are executed

z create document types to differentiate betweenthe individual postings

z define validation rules

At the conclusion of this unit, you will be able to:

Data Collection - Topic Objectives

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Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information System

Basis:Basis: Individual financial statementsIndividual financial statements in different in different currencies currencies

Consolidation Steps

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z Before consolidation can take place, you musttransfer the financial statement data of theindividual consolidation units into the R/3 System.

z You define validation rules to check the transferredvalues and prepare the system for standardizingand consolidation entries.

Data Collection - Business Scenario

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Data Collection - Overview

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Flexible File Flexible File UploadUpload

Singledocument

Data entrylayouts

R/2LocalLocalledgerledger

DB

MS AccessMS Access

manualentry

online

Non-SAPNonNon--SAPSAP

EC-EC-CSCS

Rollup

Profit and Loss

123

CASales

B50

MS ExcelMS Excel

PeriodicPeriodicExtractExtract

Data Collection Methods

Web AccessWeb Access

offline

��Data collection from SAP Systems:

• Realtime update from other application components within the same SAP system

• Rollup from an FI-SL ledger

• Rollup from another EC-CS component

• Periodic extract from FI-GL

• Periodic extract from R/2

��Data collection from non-SAP systems:

• Flexible upload of data extracts from non-SAP systems

• MS Access offline data entry using an additional MS Excel interface

• Web Access

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Consolidation ofinvestments doc.

# 4711

Parent Æ Subsidiary

100000

...

Changes ininvestments

ParentÆSubsidiary

+ 80% acquisition 100000

First consolidation

Additional financial data (2)

Consolidation of investments

task (4)

ECMCA

ECMCT

Financial datainvestment 100000

Acquisition

Consolidationdocuments

IndividualIndividualFSFS

(1)(1)

Validation

(3)

Financial Data in Consolidation

��Consolidation with the EC-CS component is based on totals data. This data is recorded using various data collection procedures and is stored in the totals table ECMCT.

��Additional financial data relevant for consolidation is also entered in separate tables. This additional data is not necessarily reported by consolidation units in their individual financial statements.

��All postings made during the consolidation process are saved as documents in the journal entry database ECMCA.

��The totals table ECMCT therefore includes the following: All data from the individual financial statements, changes or additions to this dataset as a result of any additional financial data reported Standardizing entries and Consolidation entries

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Data Collection - Status Management

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USA

Germany

Australia

Segments

++ Consumer non-food

-- Pharmaceuticals

++

++

++

Electronics

Corp. Other

Milestone• User defined tasks• Traffic light for "overall" status• Execute tasks in test / update mode• Audit information• Filter option

Tasks

++

++

Status Monitor

Hierarchy of groups/units Overall Status � Data collection Validation Translation . . .

��The data monitor and the consolidation monitor control the status of the consolidation process, and tasks can be started directly from within the monitor. Each monitor can accommodate as many tasks as required.

��Tasks are user-defined. They are grouped into task groups, which carry information about their sequence. Task groups are assigned to dimensions.

��Overall status of consolidation units and groups

• Initial stage / open / error(s) / complete

��Detailed status per task:

• Initial stage / incomplete / errors / error-free / provisional / blocked / unblocked / irrelevant

• Date last changed/ user responsible for last change / number of errors or warnings

��Tasks can be run in test or update mode. They can be run successively up to the next milestone or without stop.

��Period can be opened or closed.

��You can call up the last log for the selected consolidation group and/or the selected unit and the tasks. This function is only available for a task, when you have activated log archiving in Customizing. Note that this new function does not yet support all task categories.

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DimensionGlobal system settings Background settings for monitor:

•Status management activated•Open periods explicitly

Task settings:•Automatic blocking aftersuccessful completion of task

•Specification of task as"milestone when runningsuccessive tasks"

•Position in sequence of tasks,if equal-ranking with othertasks

Data monitor

1 3

Year/period effective / Period category

Task group

Tasks

2

Customizing the Data Monitor

Group-dependent task groups

��All tasks assigned to a task group must be executed for all the consolidation units. Exceptions are tasks for manual posting, data collection, and those that you specify irrelevant for a unit.

��Once you have started consolidation processing for a period, you should not change the task groups that you are using.

��Note: The system regards all manual posting tasks as milestones.

��Group-dependent task groups: When you assign a group-dependent task group to a consolidation group, then the monitor only displays the tasks of the relevant group-dependent task groups. Normally such a task group does not include all tasks, which are assigned to the global (dimension level) task group. Note the following rules:

• A group-dependent task group must always be a partial number of the global task number.

• It must always start with the first task of the global task group.

• There can be no gaps in the global task sequence.

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Balance carryforward

Data collection

Validation of reported data

Currency translation

Manual posting

Validation of standardized data

Item subst./Retained earnings

Apportionment

Preparation for change in group

Rollup to group (reported data)

Reclassification

1 2 3 4 5 6 7

Task group

Predefined sequence

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

• Tasks within a single block can be executed in any order.

• The task sequence can be controlled by the specification of preceding tasks.

• The sequence of equal-ranking tasks can be specified.

User-defined

sequence

Sequence of Tasks in the Data Monitor

X

X

��A task for the validation of standardized financial data must be included in the data monitor task group. All other tasks are optional.

��The following tasks can only be entered once in the task group, although they are assigned to more than one block: Item substitution/retained earnings, Rollup to consolidation groups.

��The following tasks can also only be entered once in the task group: Balance carryforward, Data collection, Validation of reported financial data, Currency translation, Apportionment, Validation of standardized data.

��The tasks Manual posting and Reclassification can be entered several times in the task group. But then they must differentiate by the assigned document type.

��Status management also lets you execute custom tasks at any point in time. You can insert custom tasks into any of these 7 blocks.

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Data Collection - Online Data Entry

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z Units• Data transfer method• Financial data type

z FS items• Breakdown category

((

(((

z Data entry layouts

z Data entry profile

z Task data entry

PreparationPreparation

Customizing elementsCustomizing elements

Customizing Online Data Entry

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Data entry layouts

Data entry profile

Data entry version

Balancesheet

ISn : n

A

L2

Q

Financial data type

Period cat.

GS1

Data entry group

Consolidation units

Settings for Online Data Entry

��Companies in a group often have different requirements concerning reported financial data. That is why you can formulate different rules for each consolidation unit in the data entry version.

��A data entry profile consists of the assignment of a data entry group to a combination of special version for data entry, financial data type, and period category. The data entry profile valid for a consolidation unit/group determines which data entry layouts can be used for entering its financial data. Data entry groups, period categories, and financial data types are valid in all dimensions and versions. Data entry layouts are valid for a specified chart of accounts. When you start the data entry task in the data monitor, only layouts can be used from the data entry group whose chart of accounts matches that in the global parameters. You can assign a data entry layout to more than one data entry groups.

��In the period category, you specify all the periods in the fiscal year in which you enter the same category of financial data.

��You use financial data types to categorize the detail level of the financial data reported by a unit, and also the category of data that it reports. For example, you could assign one financial data type to units that, due to their size and importance, enter highly detailed data (possibly more frequently), and a different data type to units of lesser importance.

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Bal. Sheet

Income Stmt

Income Stmt

Version

001

Data entry profile

Co. 1

Q

Period cat. Periods

1, 2, 4, 5, 7, 8, 10, 113, 6, 912

CU

Q

A

Fin. data type 6

Co. 1

A

I/S, Bal. Sheet

Data entry layoutsGroup

L1 L2 L3

Period

Period categoryM Y

L1 L2 L3

L1 L1 L3

Financialdata type

B

Co. 2

I/S, B/S, Notes

Income statement

Y

M

Co. 2 001 B

Variable Scope of Reported Data

��The scope of data to be reported by each consolidation unit can be flexibly defined. In the example above, company 1 must enter balance sheet and income statement data in period 6, whereas company 2 only needs to enter income statement data.

��The following Customizing elements determine the scope of reported data:

• Data entry groups - a collection of any number of data entry layouts

• Period category - encompasses periods which require the same processing in Consolidation.

• Financial data type - indicates which units have the same requirements for reporting data.

• After defining the above, you specify (a) which consolidation units belong to which financial data type, and (b) which data entry group is valid for which combination of financial data type and period category.

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Operating expenses by functional area

Actual data

LegalGermany

PartnerC2000C3000C4100C2000C2200

C4100

F. areaCOGSMarketingAdminR & DSales

LC in DEM

4500070009000

120004000

1998 / 012 100

01C1000

Payables / receivables

Year, periodVersionDimensionUnit

1998 / 01210001C1000

Actual dataLegalGermany

FS item 1042

2046

TextA/R

A/P

PartnerC2000C3000C4100C2000

C2200C4100

TextFranceUSACanadaFrance

UKCanada

LC in DEM1000

2000500

6000300

1800

D/C

+++---

Online Data Entry with Flexible Layouts

��User-definable data entry layouts are used for entering reported financial data online in the SAP System. They can also be used for entering data offline. Microsoft Excel can be started within the SAP GUI and serves as an entry screen and/or display screen.

��Each layout can have its own unique structure. You define the row structure and specify the currencies and/or quantity units of measure that you want to enter.

��The row structure is usually based on the financial statement items and their breakdowns by partner unit, subitem, transaction currency and/or year of acquisition.

��To display comparison values from other versions, years or periods, you can create value columns, which are not ready for input. You specify the characteristics version, year or period in these columns or you refer to other variables and/or the global parameter. Alternatively to the definition of lead columns, you can now define individual rows. By doing this you have additional possibilities to create layouts to further meet your individual requirements, for example by defining empty rows. You can use the characteristics version, year or period in value columns, which are ready for input, to enter data values simultaneously in several versions, years or periods. The status management for the monitor is read correspondingly.

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Data entry layout Edit Goto Extras Formatting Environment System Help

Data Entry Layout 01-10000 Bal. Sheet

FS item Local currency

XXX.XXX.XXX

Definition of input area

X

Fiscal year

Period

Version

Dimension

Consolidation unitCons chart ofaccountsUnit of measure

General Data Selection: CharacteristicsGeneral Data Selection: Characteristics

Headercharacteristics

Lead columns withcharacteristics• FS item• Partner Unit• Subitem• TC• Acquisition yr

Value columnswith key figures• GC• LC• TC• Quantity

Definition of Data Entry Layouts

��Data entry layouts are used for entering reported financial data online in the R/3System or offline in a Microsoft Access database.

��The layouts that you require depend on the level of detail and type of data to be entered. For example, you could use different layouts for entering balance sheet data, income statement data, and quantities.

��You define a data entry layout for a particular chart of accounts.

��The structure of a layout is flexible. You define the layout of the rows (a combination of characteristics and characteristic values in the lead columns, for example, FS items and their breakdown by partner unit, subitem, transaction currency and/or year of acquisition). You also specify the currencies and/or quantities that you want to enter.

��You can enter both currencies and quantities in a layout.

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Data Collection - Offline Data Entry

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Multilingual Comparison values

zz FS itemsFS itemszz Cons unitsCons unitszz CurrenciesCurrencies

Master dataMaster datazz Data entry layoutsData entry layoutszz ValidationsValidations

OrganizationOrganizationDatabaseDatabase Monitor

DownloadUpload of

validated data

EC-CSEC-CS

Data-Data-basebase

Additional master dataAdditional master data

Data collectionData collection

Validation checksValidation checks

Version managementVersion management

Currency translationCurrency translation

ReportingReporting

MS Access

Data import from other Data import from other systemssystems Interactive ExcelInteractive Excel

Offline Data Entry with MS Access / Excel

��You use this method if one or more units does not use any integration, but administer their reported financial data on PC. You can start the data collection both for a single unit, as well as for a group.

��You have defined master data, data entry layouts and validation rules in the SAP System, which you can transfer to MS Access with means of a download.

��In MS Access, for example, you can define more master data, which you can upload into the SAP System. In MS Access you can enter data and carry out a validation check. Apart from that you can execute a currency translation already.

��With Interactive Excel, you have another possibility for data entry. It is included in the standard MS Excel as a template. With the use of Interactive Excel as a data entry tool for an Access database, you have more flexibility than in the Offline data entry directly in MS Access. This is because the structure of a data entry form is strictly specified in MS Access.

��The entered data is loaded into the MS Access database.

��You can download data from the SAP System and the MS Access database into Interactive Excel for report purposes.

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Microsoft Access Data Entry

LayoutLayout

Cons unitCons unit

VersionVersion

YearYear

Balance sheet

Company USA

Actual data

Item Text Br Sign USD1031 Intangible assets # + 120,000.001032 Tangible assets # + 480,000.00

1033 Investment # + 100,000.001030 Assets1041 Inventory1042 Receivables1044 Cash

Microsoft Access Validation

Unit Val Text Result 1 Result 2 USA 1 E Assets <> Liab. 950,000 960,000

USA 2 W Depreciation 50,000 45,000

DEMO-1

USA

001

1998 / 012

Long text

Calculate totals

Print

Data Entry and Validation with MS Access

��Central definition and download of control parameters

• Data entry layouts

• Validation rules

��The decentralized data entry in MS Access is controlled with data entry layouts. You can change the consolidation units within the data entry layout.

��Items: You can differentiate immediately between totals items and value items. The item breakdown by double-clicking on the amount field displays a considerable difference to the R/3 layouts . The item long text can be displayed in the item.

��Decentralized validation in MS Access

• Start using consolidation unit or group

• Comparison of item values

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Data Collection - Flexible Upload

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SAP AG 2001

Data format

Dialog box

DimensionCons C/A

Header row

VersionFiscal yearPeriodLedger

Data rows

Cons unitFS itemSubitemPartner unit

Value in trans. crcyValue in local crcyValue in group crcy

Initial screen Header row Data rows

Dimension

Cons C/A

100 2000 012 US50

01

Digit format

• 1,000.00

• 1.000,00

Dr./Cr. sign

• -1.000

• 1.000-

• Separatecolumn

Column width

• Fixed

• Variable

Value in trans. crcy: Transaction currency

Flexible Upload

A;170100;120;B;USD;1000;1000;1000

A;170100;120;C;USD;250;250;250

Trans. crcy key

��You use this method if one or more units does not use any integration, but administer their reported financial data on PC. You can start the data collection both for a single unit and as well as for a group.

��Reported data/standardizing entries: You can start the data collection directly in the data monitor, when you supply the master data of the cons units with the following information:

• logical file name, server selection, upload method

The system only transfers the data streams, which correspond to the global parameters and refer to the unit to be edited. Other data streams of the file are not taken into account. You can upload standardizing entries. A document is generated per combination of ledger, consolidation chart of accounts, dimension, version, period and consolidation unit. The item breakdowns, which are uploaded, check the breakdown categories correspondingly.

��During the upload you can select between different update sessions, in order to guarantee the treatment of data streams which already exist. With this you can report again with the session Prorate, for example, partner specific detailed information to FS items, after the correct totals are already available.

��Flexible upload can also be used for file upload of organizational units, FS items and subassignments, for example you can transfer product groups from a file.

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Data Collection - Validation

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Curr. yr

Companies

Warning

Profit Center

- - -- - - - - -- - -

AssetsLiab. &Equity

Error

Posting Closing 1 consolidation unit

Across consolidation units Across dimensions

PartnerCo3 notallowed

B/S value

Total ofdetailed I/S values

Validation

Prior yr

��The concept of user-defined validation is employed in many SAP applications.

��Validations are available in addition to the standard checks in the EC-CS posting transaction. You can run validation when processing the following:

• Document header

• Individual document line

• Complete document

��Validation for a consolidation unit typically takes place after data collection (in local currency) and currency translation (into group currency).

��Validation across consolidation units or dimensions is essential for ensuring reconciled data in legal and management consolidation.

��You can check the validation result step by step in the validation log. You can verify which validation rules were interpreted in a validation step, and how the result of the step breaks down into the partial results of the validation rules involved. With the help of concrete numeric values, you can analyze the computation of the total result.

��Reporting tools such as drilldown reporting or Report Writer/Painter are recommmended to verify the values that were calculated by the validation.

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Select + - *. . . . . . . .

Cons unitFS itemSubitemPartner unit- - -

FieldsFieldsError

Warning

User-definedmessages

!

Insert

if not, then

NOT Item = 1032 Real estate AND =AND

OR Subitem = 220 Depr. = Total 0 <� >���

=<. . . no depreciation allowed >=

RuleLogicaloperators

Comparativeoperators

Formula Builder for Defining Rules

��You can define validation rules with the formula builder.

��The field selection contains, in accordance with the callup point chosen by you, the fields of the document header, the FS item, the complete document or the Consolidation totals data. You can also define validation rules with the help of the attributes which you have defined.

��The available fields, logical operators and comparative operators, can only be selected when, as a rule, they are meaningful in that place.

��If the check contains an error, then you can decide whether you want to react to the error with an error message or a warning message.

��You can store the texts for the error or warning messages in message classes. The message classes bring similar messages together.

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Data Collection - Posting

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Create master data

Standardizing entries for corporate valuation of dataStandardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information System

Basis: Individual financial statements in different currencies

Consolidation Steps: Standardizing Entries

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ECMCTTotals records ECMCA Documents

Special FS items(3)

Totals reports Documentanalysis

Document types(1)

Number ranges(2)

Tasks(4)

Posting

Postings and Document Types

��Two types of entries are posted during consolidation: adjusting or consolidation entries.

��The system posts automatic entries to selected items that you specify (for example, retained earnings in the balance sheet and income statement, provisions for taxation in the balance sheet, income tax expenses in the income statement).

��Postings are differentiated by document type.

��Each document type is assigned to a single number range for a particular version.

��A posting level and other control parameters are assigned to each document type.

��Note: You should use a document type for one task only, to enable you to repeat and and reverse postings (the system needs to be able to identify the documents posted for a task).

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• Posting level

• Balance check

• Use

• Manual Postings (if needed)

• Transaction currency• Local currency• Group currency

• Quantity

• Credit deferred tax• Debit deferred tax

?Document type

Chart of accts Version Period /

Postable item categories

FS itemSubitem categorySubitem

Assignment of subassignments

Number rangesareversion-based

Doc. type ?

Dimension 50

Documenttypes aredimension-based

Deferred income taxesPosting currency/quantity

Doc. type

Auto reversalVersion Number range

Version-Based Document Type Attributes?Characteristics

Document Types

��EC-CS supports a wide range of automatic postings. You can also post standardizing and consolidation entries manually. Postings are classified by means of document types, enabling a simple analysis and the distinction between different business functions.

��The system automatically generates journal entries (financial statement balancing adjustments and deferred income taxes). In this way, you can control the special items for deferred taxes better, independently of the respective document type. Apart from that, with document types which are larger than or equal to 20, you can define a clearing item for cross-consolidation units postings (only for these posting levels can a cross-consolidation unit posting take place).

��When you want to specify selected items for the document type, then enter an item for the debit and credit postings.

��You need to use different document types to distinguish between manual and automatic postings. You can use identical or different number ranges for posting.

��The account assignment takes place by item number and as desired by subassignment possibilities, which you can specify individually.

��A reversal function (and a mass reversal function) is available for single documents.

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Group-dependentGroup-dependentelimination entrieselimination entries

Two-sidedTwo-sidedelimination entrieselimination entries

Standardizing entriesStandardizing entries

Reported dataReported data

Non group-dependent Group-dependent

00 01

10

02

12

20 22

30

AdjustingAdjustingentryentry

DivestitureDivestitureentryentry

Posting Levels I

��The posting level standardizes postings in the Consolidation system, for example:

• Adjustments to reported financial data

• Standardizing Entries

��Further posting levels:

• Space: Financial data from realtime update

• 08: Item substitution based on levels "space", 00, and 01

• 23: Two-sided elimination (special logic), particularly for eliminating investment revenue during mutual stock consolidation

• R0 to R3 Reporting Report Writer (rollup only)

��Standardizing entries are valid in all consolidation groups containing the consolidation unit that is posted against.

��Two-sided consolidation entries are only valid for consolidation groups in which the cons unit and partner unit are consolidated using either the purchase, proportional or mutual stock method (levels 23, 24).

��Postings that are dependent on the consolidation group are either only valid for the relevant consolidation unit (levels 02, 12, 22, 24) or for the consolidation group and all other groups in which it is included.

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Activity Level Unit Partner ConsGroup Text1 10 C - - Standardizing entry2 20 A B - Elim. of IU pay./rec.3 20 A D - Elim. of IU pay./rec.4 30 E D CG1 Cons of investments

1 2 3 4CGCG1 X X X XCG2 X X - -CG3 X - - X

Document validity for cons groups:Doc.

Unit B

DocDoc. 2. 2DocDoc. 3. 3

DocDoc. 1. 1

CG2CG2DocDoc. 4. 4

CG3CG3

CG1CG1

Unit D

Unit E

Unit C

Unit A

Posting Levels II

��You specify a posting level when you define document types.

��Journal entries are stored in the database with a respective posting level. In reporting, they can be subdivided by posting level.

��In the above example, documents are portrayed for different tasks: Activity 1: The standardizing entry to cons unit C only affects this unit. The document is valid in all cons groups (CG). Activity 2: The elimination of IU payables and receivables between A and B is valid in cons groups 1 and 2. Activity 3: The elimination of IU payables and receivables between A and B is valid in cons group 1, as both companies are only affiliated companies at group level. Activity 4: The task consolidation of investments is started in CG1, the document is created in the lowest affected cons group CG3 and is also valid in CG1.

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z apply different data collection procedures andknow when to use them

z execute standardizing and consolidation entries

z define selected items, in which automaticpostings are executed

z create document types to differentiate betweenthe individual postings

z define validation rules

You are now able to:

Data Collection - Unit Summary

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Data Collection Exercises

Unit: Data Collection Topic: Online Data Entry, Part I

At the end of these exercises you will be able to:

• Define data entry layouts and using these layouts to collect data

1-1 Financial data types:

Create a financial data type for your example.

Name: A (for group 01) ... R (for group 18)

Assign the financial data type to the consolidation units.

1-2 Layouts:

According to the steering committee, consolidation unit A is entered manually.

The group requires data entry layouts, which you create as follows:

• LXY-0001 Balance sheet

• (XY = 50 + your group number)

The balance sheet layout contains all of the relevant balance sheet items with their characteristic values and description, and also the local currency.

• LXY-0003 Asset history sheet

• (XY = 50 + your group number)

The asset history sheet contains all the relevant asset items and the item Investments in Subsidiaries – Purchase with the following:

- item description

- breakdown by subitem (transaction type)

- partner unit in local currency

Look at the individual financial statement data reported by cons unit A and decide which items you require.

Your colleague has already created the remaining layouts for testing, using a different naming convention.

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Since you want to use uniform layout naming for the presentation, copy these layouts using the Copy function and change the layout names as follows:

Template Your layout

L50-0002 A/P - A/R LXY-0002 (XY = 50 + your group number)

L50-0004 Changes in Investee Equity

LXY-0004

L50-0005 I/S with Functional Area LXY-0005

L50-0006 Income From Invest. Affiliates

LXY-0006

L50-0007 Sales by Region LXY-0007

Make sure that you change the values for the consolidation chart of accounts and the dimension under General Selections !

You must make the dimension and chart of accounts group-specific, and you may not use variables.

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Individual financial statement data for A:

Version: 100, Year: 2000, Period: 12, Ledger: US

CU FS item Subitem Partner

CU

Trans. crcy key

Trans.

crcy

Local

crcy

Group

crcy

Item text

A 130100 B UNI 600 400 400 IC Trade Rec.

A 130100 B USD 200 200 200

A 130100 C UNI 500 300 300

A 130100 C USD 300 300 300

A 170100 120 B USD 1000 1000 1000 Invest. Purchase

A 170100 120 C USD 260 260 260

A 191500 100 USD 600 600 600 Mach. & Equip.

A 191500 120 USD 300 300 300

A 191500 140 USD -100 -100 -100

A 191500 220 USD -100 -100 -100

A 201100 USD -60 -60 -60 Trade Payables

A 210100 B UNI -130 -100 -100 IC Trade Pay.

A 210100 B USD -150 -150 -150

A 210100 C UNI -300 -200 -200

A 210100 C USD -150 -150 -150

A 250100 100 USD -2000 -2000 -2000 Common Stock

A 251200 120 USD -500 -500 -500 RE-Current Year

A 301100 400 USD -5000 -5000 -5000 Sales 3rd Party

A 310100 0001 USD 4520 4520 4520 Raw materials.

A 311950 0003 USD 100 100 100 Amortization

A 320400 B USD -120 -120 -120 Investment Income

A 390000 USD 500 500 500 Annual net income

Do not enter credit signs!! The sign will be determined by the definition of the FS item/subitem.

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1-3 Data entry group:

You want to carry out the data entry for a unit with a specific data entry layout on a particular date.

Define a data layout group (XY = 50 + your group number). This group should contain all the layouts you created in section 1-2.

1-4 Data entry profile:

Specify that all layouts in group XY are valid for cons unit A when entering data quarterly in version 100.

Your colleague has already created the appropriate period categories (2 and 3) for periods 12 and periods 3,6,9, respectively. Use these in your profile.

Caution:

Use your own financial data type!

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Unit: Data Collection Topic: Data Monitor

At the end of these exercises you will be able to:

• Define tasks and task groups

2-1 Define the following global system settings:

• Use the data monitor and the consolidation monitor to visually keep track of the status of your various tasks.

• Activate status management in order to ensure that individual consolidation steps are carried out in the correct order.

• To simplify your presentation, specify that new periods are open by default.

2-2 Run the following tasks in the data monitor:

Name Short text Medium text

DATA INPUT Data entry Online data entry

LOCAL VAL Valid. LC Validation in local currency

GROUP VAL Valid. GC Validation in group currency

• Create the task for data entry and two validation steps in the Implementation Guide (IMG).

• Assign them to the task group DATA with the description Data Monitor.

• In the definition of the task group, specify that you want validation tasks to be automatically blocked after completion without errors.

• Assign the task group to your dimension using the period category 2 and 3 (see exercise 1-4).

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Unit: Data Collection Topic: Online Data Entry - Part II

At the end of these exercises you will be able to:

• Enter individual financial statement data in layouts

3-1 Data collection:

You now use the data monitor to enter data for cons unit A for your presentation example.

Run the appropriate task in the data monitor, and enter the financial data provided in 1-2.

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Unit: Data Collection Topic: Flexible Upload

At the end of these exercises you will be able to:

• Enter individual financial statement data by means of a flexible upload

4-1 Defining an upload method:

According to the steering committee, all the remaining cons units (B, C, D, and E) use Microsoft Excel to report their individual financial statements.

Your colleague has already entered the data for consolidation units B, C, D, and E in an Excel worksheet extract file (.TXT).

The data is transferred to R/3 using a flexible upload.

Define the upload method UPLXY (XY = 50 + your group number) with the following properties:

• Column width: variable

• Field separator T: file type “Text (Tabs delimited)”

• Row Type Indicators: Do not use

• Comment character: “*”

• Digit separators: "1,000.00"

• Debit/credit signs: Copy from upload file without changes

• Update mode: Delete all items

• Input type: Cumulative

• Dialog box: enter the dimension and consolidation chart of accounts

• Header row: enter the fields (in this order): Consversion, fiscal year, period, and ledger

• Data rows: enter the fields (in this order!!): consolidation unit, FS item, subitem, partner unit, transaction currency, value in transaction currency, value in local currency, value in group currency, user-defined field

5-1 Optional exercise: Assign flexible upload method and file in master data maintenance.

5-1-1 Assign your upload method and file to all units in consolidation group G2 by using consolidation group hierarchy maintenance.

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6-1 Running a flexible upload.

6-1-1 Load the data for all units in consolidation group G2 into the system.

6-1-2 Check the contents of the totals database, and then block the task.

Your instructor will show you the path and file name.

The data format is ASCII.

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Unit: Data Collection Topic: Entering Additional Financial Data

At the end of these exercises you will be able to:

• Enter data in the additional financial tables

Your presentation example includes a unit on the consolidation of investments. Therefore, you also need to collect additional financial data, which is used by the consolidation task.

In practice, subsidiaries supply this information along with the other reported financial statement data. This is why you populate these tables in the course of the data collection.

Two steps are necessary before you can collect the additional financial data for the consolidation of investments:

a) You need to define the system utilization for the consolidation of investments.

b) You must define the global settings.

7-1 System utilization of consolidation of investments:

Under system utilization, define the consolidation types that were decided upon by the steering committee:

• Accounting technique:

• Almost all of the consolidation units are consolidated fully.

• The exception is consolidation unit E, an affiliate, which uses the equity method.

• Treatment of goodwill:

• Any positive or negative goodwill resulting from the consolidation is to be amortized.

You do not have any further details, such as the amortization method, at this point. These settings can be defined later in unit Consolidation of Investments.

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7-2 Global settings: At this point, you make a note in your presentation guide, that the IMG settings under Specify System Utilization for C/I greatly affect the screen contents in the IMG step Make Global Settings.

Determine the following global settings for your example, as agreed upon with upper management:

• The data concerning changes in equity are gathered from the totals database and the additional financial data.

• All other specifications will be made in the unit on consolidation of investments (see exercise 7-1).

Further settings are made in the consolidation of investments.

7-3 Entry of activities for the additional financial data:

7-3-1 Execute the DATA INPUT task for consolidation group G1.

7-3-2 Enter the activities listed below, making a note of each of the activity numbers for the different steps in your forthcoming presentation.

Changes in Investments

A) First consolidation:

Investment A B 170100 120 +80% 1000 USD 1000 USD

Capital Stock B 250100 100 + 1000 USD 1000 USD

B) First consolidation:

Investment A C 170100 120 +16% 260 USD 260 USD

Investment B C 170100 120 +60% 1000 USD 1000 USD

Capital Stock C 250100 100 + 1000 USD 1000 USD

C) First consolidation:

Investment B D 170100 120 +75% 1050 USD 1050 USD

Capital Stock D 250100 100 + 2500 UNI 1000 USD

D) First consolidation:

Investment B E 170300 120 +40% 800 USD 800 USD

Capital Stock E 250100 100 + 1000 USD 1000 USD

Block the task DATA INPUT for the entire corporate group.

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Unit: Data Collection Topic: Validation I

At the end of these exercises you will be able to:

• Define simple validation rules using the formula builder

You have now entered the individual financial statement data of all the consolidation units in your prototype example.

This data now needs to be validated, in order to provide a correct basis for the following tasks.

8-1 Defining and running a validation:

8-1-1 Define validation VXY (where XY = 50 + your group number).

The validation contains two simple steps:

1st check:

Ensures that the sum of asset FS items is equal to the sum of liability/equity FS items.

2nd check:

Checks whether depreciation of machinery and equipment in the balance sheet is equal to the depreciation expense of machinery and equipment in the income statement.

Specify the standard messages 601 and 607, and use the local currency fields for message output.

8-1-2 Assign the validation rule to all consolidation units.

8-1-3 Run the task that validates the local currency data. The system automatically blocks the task if it is successfully completed for the whole group G1.

You have already made the appropriate setting in section 2-2.

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Unit: Data Collection Topic: Posting

At the end of these exercises you will be able to:

• Post a standardizing entry.

• As the next step, you want to present a manual adjustment entry.

You assume that consolidation unit A recorded a useful life of 10 years for an asset, whereas the group will depreciate the asset only over a period of 5 years.

This posting, which has an effect on earnings, automatically triggers an allocation of deferred taxes and an adjustment of annual net income.

The tax rate of 40% applies to all consolidation units.

You already created the necessary selected items in a previous step.

• You also explain how to post a reversal of a generated document.

You add one more assumption to your example:

The information regarding the difference in the depreciable life was wrong.

The original depreciation of consolidation unit A was correct, and should not be adjusted for the corporate group. You therefore post a reversal to the document that was posted.

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9-1 Depreciation adjustment:

9-1-1 Define a tax rate of 40% for all consolidation units for posting deferred taxes.

Use the function Carry out Mass Change.

9-1-2 Define document type 10 for postings in local currency (LC) in conjunction with deferred taxes.

For this document type create a new number range 10 with document numbers from 1000000000 through 1999999999.

9-1-3 Create a new task called STD POST:

• Short text: Adj.Entry; medium text: Adjustment Entry

• Assign the new document type 10 to the task, making it effective from the current fiscal year and period 12.

9-1-4 Add task STD POST to the tasks in your task group.

9-1-5 Post the adjustment entry in the data monitor.

Make a note of the document number and display the document.

In the Information System, display a list of the totals records and journal entries.

9-2 Reverse the document created beforehand.

9-2-1 Display the document and make sure that the reversal document number is recorded in the original document, and the organization document number is recorded in the reversal document.

9-2-2 Block the task STD POST in the data monitor for the entire corporate group G1.

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Data Collection Solutions

Unit: Data Collection Topic: Online Data Entry, Part I

1-1 Financial data types:

To define a new financial data type in the Implementation Guide, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Define Financial Data Types

Create a financial data type for your example.

Name: A (for group 01) ... R (for group 18)

Choose New Entries.

Save your entries when finished.

Assign the financial data type to consolidation units A, B, C, D, and E, effective as of 2000, by choosing:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Assign Financial Data Types

Save your entries.

1-2 Layouts:

To define data entry layouts, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Define Data Entry Layouts o Create Data Entry Layout

1. Enter the name and description for the balance sheet layout, and choose Create.

Name: LXY-0001 Description: Balance sheet (XY = 50 + your group number)

2. To specify characteristics for the layout header, choose Edit o Gen. data selection o Gen. data selection in the layout definition screen.

3. Select all the characteristics except FS item from Available Characteristics and press the left arrow icon to move them to the Selected characteristics table.

4. Define a variable for all characteristics except Dimension and Cons chart/acct by checking the Variable on/off box (third column)

5. Enter your own dimension and chart of accounts in the From column. Confirm your entries.

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6. In the Report Painter screen for layout definition, double-click on the first column (lead column).

7. Select the characteristic FS item from Available Characteristics and press the left arrow icon to move them to the Selected characteristics table.

8. Enter the item range 100000 to 299999 in the From and To columns.

9. Enter a text for this lead column (for example, FS item). Choose text icon at bottom of dialog box. Select confirm.

10. In the lead column structure, select Characteristic value and name. Specify a length of 8 for the characteristic value, and a text length of 30 and confirm your selection. Choose Lead Column icon at bottom of dialog box. Select Confirm.

11. Double-click on Column 1.

Select the key figure Local currency. Use key figure drop-down menu.

Enter short, medium, and long texts. Text icon is at the bottom of entry box.

12. To add the debit/credit sign you put the cursor on the column header Local currency.

Choose the menu Edit o Element o Insert Element.

Select Element type Attribute. Press Enter to confirm. In the pop-up window press Confirm to confirm the element definition of debit/credit sign.

Confirm your entries and save the layout.

Use the same procedure to define an asset history sheet layout.

Name: LXY-0003 Description: Asset history sheet (XY = 50 + your group number)

1. Choose Edit o Gen. data selectiono Gen. data selection and maintain same as with the first layout.

2. For the first lead column select FS item. Do not specify an item range; instead enter the items 170100 and 191500 individually. Enter 170100 in the From column; press the More arrow, and enter 191500 on the next line.

3. Enter a text using the Text icon at the bottom of entry box. Using the Lead column structure icon at the bottom of box, select Characteristic value and name, and specify a length of 8 places for the characteristic value, and a text length of 20.

Confirm.

4. You also need to define two further lead columns in this layout.

Choose Edit o Columns o New lead column

The first lead column is for the characteristic Subitem (transaction type), with the range 100 - 299, text Subitem, a characteristic value length of 5 and a text length of 20 places. Confirm.

The second lead column is for the characteristic Partner unit, with the range A to E, text Partner, and a characteristic value length of 7 places. Name is not needed. Confirm.

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5. Sort the lead columns by going to Edit → Columns → Sort lead columns.

Place FS Item first; Subitem second; and Partner Unit third.

Define the local currency column and the debit/credit sign as you did for the balance sheet layout. Save.

You can create all the other layouts using the copy function. To do this, stay at:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Define/Create Data Entry Layouts Enter the name (e.g. LXY-0004) and description of the new layout, and the name of an existing layout which you want to use as a template (e.g. L50-0004) in the Copy from section. The names of the layouts and templates are in the Exercise section, Exercise 1-2.

Choose Create and then Edit o Gen. data selection o Gen. data selection in order to change the chart of accounts and dimension to that of your group

You must define the dimension and the chart of accounts as being group-specific, and you may not use variables.

Then save the layout.

Repeat this procedure to create the remaining 5 layouts.

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1-3 Data entry group:

To define a data entry group, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Define Data Entry Groups

Choose New entries and enter a name for your group (50 + your group number) and a description, for example Group XY.

Choose the group you just created and select the Assignment of data entry layouts folder and choose New entries. Provide a sequence number (e.g. 010,020,030,etc.) and assign all the layouts that you have defined, including those for which you used a template, to this group. Do not check the Integrated Excel box; you will not use this option at this time.

Save your entries.

1-4 Data entry profile:

To define a data entry profile, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online and Offline Data Entry o Settings for Online and Offline Data Entry o Define Data Entry Profiles

Choose New entries, and enter your financial data type (A for group 1 to R for group 18), the period category 2 (period 12 data entry), and the data entry group that you defined in section 1-3. Make a second entry, entering your financial data type, the period category 3 (periods 3,6,9), and your data entry group. Save your entries.

The period categories 2 and 3 already exist. Period categories are defined at:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Online or Offline Data Entry o Settings for Online or Offline Data Entry o Define Period Categories

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Unit: Data Collection Topic: Data Monitor

2-1 Global system settings:

To change the global system settings, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Check Global System Settings.

Select Status management activated.

Do NOT select Open periods explicitly

2-2 Tasks:

To define the data collection task DATA INPUT, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Define Task Choose New Entries. Enter task name, task category and texts as listed in Exercises section.

Task Category is Data Collection. Save your entry.

To define the validation task LOCAL VAL, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Validations for Reported Data and Standardized Data o Define Task

Choose New Entries. Enter task name, task category and texts as listed in Exercises section.

Task Category is Validation of Reported Financial Data. Save your entry.

To define the validation task GROUP VAL, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Validations for Reported Data and Standardized Reported Data o Define Task Choose New Entries. Enter task name, task category and texts as listed in Exercises section.

Task Category is Validation of Standardized Financial Data. Save your entry.

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To define the task group DATA, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Define Task Group Choose New entries, and enter the name DATA and description Data Monitor for the task group. Select the task group you just created and double-click the Assign tasks to task group folder. Choose New Entries and assign the tasks that you have defined to this task group (without specifying preceding tasks). Autoblock the validation tasks. Save your entries.

To assign the task group to a dimension, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Assign Task Group to Dimension

Choose New Entries.

Field or Data Type Value

FY effect.

Period Effect.

Period Cat.

Data mon task group

current year

12

2 and 3

DATA

Save your entries.

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Unit: Data Collection Topic: Online Data Entry - Part II

3-1 Data entry:

To go to the data monitor from the initial R/3 screen, choose:

Menu Path: Accounting o Enterprise controlling o Consolidation o Data Collection o Monitor

• Expand the hierarchy.

• Put your cursor on the cross-section between the row for cons unit A and the column for the data entry task.

Choose Update run.

Do not enter Credit signs!!

• Work through the individual layouts, entering the financial statement data for A (from the table in Exercise section 1-2).

Select each layout and enter data appropriate to that layout. Choose the Post icon when finished with each layout. Choose next layout. Repeat.

In some of the layouts, you only need to enter one value.

• Save your entries.

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Unit: Data Collection Topic: Flexible Upload

4-1 Defining an upload method:

To define an upload method, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Collection o Data Collection from Non-SAP Systems o Define Method for uploading reported financial data oMaintain methods for uploading financial data o Choose Choose New entries and enter the name of your upload UPLXY and a description (for example, Upload group XY). Save your entries.

A detail screen appears in which you define your upload.

In the top half of the screen, define the upload method with the following properties:

1. Column width: variable

2. Field separator: “ Tabulator”

3. Row Type Indicators: “ Do not use“

4. Comment character: “ *”

5. Digit separators: "1,000.00"

6. Debit/credit signs: Copy from upload file without changes

7. Update mode: Delete (all items)

8. Input type: Cumulative

Use the functions at the top of the screen to change the field separator to T, the digit separator to 1,000.00 , and the comment character to *.

Define the dialog box and file rows as follows and in the exact order:

1. Dialog box:

enter the Dimension and Cons chart of accounts

2. Header row:

enter the ConsVersion, Fiscal year, Period, and Ledger

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3. Data rows:

enter the fields Consolidation unit, FS item, Subitem, Partner unit, Transaction currency , Value in transaction currency, Value in local currency, and Value in group currency

From the Remaining fields block, select the characteristics that you require and move these to the appropriate blocks. Move the characteristic by putting your cursor on it, choosing Select, putting your cursor on the target block, and choosing Move.

Save your settings.

5-1 Assign flexible upload method and file in master data maintenance.

5-1-1 To assign your upload method to all units in consolidation group G2 choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Organizational Units o Consolidation Groups o Maintain hierarchies oMaintain consolidation group hierarchy o Choose

Expand the hierarchy. Double-click B,C,D, and E, respectively, and on the Data Collection tab, enter the name of the upload method you have just defined. Save after each cons unit is maintained.

Your instructor will show you the path and file name.

The data format is ASCII.

6-1 Running a flexible upload:

Note: This solution consists of several sections. These sections cover exercises 6-1-1 and 6-1-2.

Start a second R/3 session, in which you choose:

Menu Path: o Accounting o Enterprise controlling o Consolidation o Data Collectiono Monitor

1. Expand the entire hierarchy

2. Put your cursor on the cross-section between the row with consolidation group G2 and the column for the data entry task. Choose Update run.

3. On the next screen, start the upload for the cons units B, C, D, and E by selecting the icon Import data for all CUs with transfer method Flexible upload in the main screen.

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4. Choose the upload method you have just defined and the physical file name as given to you by your instructor. Select file format ASC (ASCII) and Presentation server. Press Execute and check the audit trail for errors.

5. To display a list of data records generated by the upload, from within the data monitor, choose:

Menu Path: Goto o Database listing of totals records

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Unit: Data Collection Topic: Entering Additional Financial Data

7-1 System utilization of consolidation of investments:

Define the system utilization at:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of Investments o Determine system utilization for C/I

• Select New entries. The detail screen appears.

• Under Accounting Technique, select “ purchase method“ and “ equity method“ .

• The treatment of goodwill is defined in the Further Settings section of the screen.

• Select the options Amortization of goodwill and Amortization of negative goodwill.

• Save your entries.

7-2 Global settings:

To maintain the global settings, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of Investments o Make global settings

Select New entries. The detail screen appears.

Only modify the settings under Get investee equity data from. Select the Totals database and additional fin. data flag.

Save the change.

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7-3 Activity entry:

7-3-1 To enter the activities, start the data monitor at:

Menu Path: Accounting o Enterprise controlling o Consolidation o Data Collectiono Monitor

In the hierarchy, place the cursor on the cross section for consolidation group G1 and the data entry task. Then choose Update run.

7-3-2 Enter the listed activities, as listed in the Exercise section 7-3, in the Changes in Investments table by selecting “ Changes in Investments“ under the Additional financial data folder. Write down each assigned activity number.

Save your entries.

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Unit: Data Collection Topic: Validation I

8-1 Defining validation VXY:

8-1-1 To define a validation, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Validations for Reported Data and Standardized Data o Define validations o Create validation o Choose

Enter VXY as the name of your validation (where XY = 50 + your group number)

Put cursor on VXY folder . Then choose Insert step icon. Edit the steps Prerequisite, Check, Message successively by placing cursor on each and double-clicking.

Make the following settings for the validation using the Formula Builder

Validation step 001: Total assets = Total liabilities + stockholders’ equity

Field / Data Type Value

Prerequisite:

Check:

Message:

TRUE

SUM ( ECCSDAT-HSLYD ) where T100000 = SUM ( ECCSDAT-HSLYD ) where T200000

Use the existing message 601

Use the existing rules T100000 and T200000.

Note that the check is structured as follows:

SUM (*Table field*) WHERE *Rule* *Operator* SUM (*Table field*) WHERE *Rule*

When choosing Table fields, first select Data structure for CS validation, then you will see the field descriptions, for example, local currency YTD.

You can display the technical names in the top section of the screen by choosing Settings o Technical names.

You can display the technical names in the tab section of the screen by selecting the Display Technical Name icon (3rd icon) to the right of the field name listings.

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With cursor on VXY on left side of screen, choose Insert step icon.

Validation step 002 : Depreciation of machinery and equipment in the balance sheet = depreciation of machinery and equipment in the income statement

Field/Data Type Value

Prerequisite:

Check:

Message:

TRUE

SUM ( ECCSDAT-HSLYD ) where T191500_220 + SUM (ECCSDAT-HSLYD) where T311950 = ’0.00’

Use the existing message 607

Use the existing rules T191500_220 and T311950.

Choose the CONSTANT button to enter the constant value 0.

Save your definition.

8-1-2 Assign the validation to your cons units by choosing:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Validations for Reported Data and Standardized Data o Assign Validations to Consolidation Units

Select New Entries. Make the assignment for period category 2 and 3. Enter the appropriate validation in the columns Val. rptd and Val. std for each of your cons units. Save.

8-1-3 Since you have already defined validation tasks and assigned them to the task group, you only need to ensure that the Automatic blocking indicator is set for both of the validation tasks.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Define Task Group Now go to the application and run the data monitor. Execute the local currency vaidation task for consolidation group G1 by placing the cursor at the cross section between unit G1 and the LOCAL VAL task, and choosing Update run.

Menu Path: Accounting o Enterprise controlling o Consolidation o Data Collectiono Monitor

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Unit: Data Collection Topic: Posting

9-1 Depreciation adjustments:

9-1-1 Add the percentage rate for posting deferred taxes in the master records of the consolidation units.

Since this change is the same for all units, use the Mass Changes function.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o Organizational Units o Consolidation Units o Carry out a mass change

Enter the following values:

Field/Data Type Value

Dimension

Consolidation group

Consolidation units

Version

Year

Period

New values → save as new value

Test run

(group-specific)

G1

A through E

100

current year

12

40 % tax rate

No

Execute program.

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9-1-2 Define the new document type 10.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Manual Posting o Define document types Choose New entries and enter the following:

Field/Data Type Value

Document type

Description

Posting level

Balance check

Application

Manual posting

Posting in local currency

Deferred Taxes

Number Range Maintenance:

Number range ID

Number range

Year valid until

10

ADJUSTMENT ENTRIES

10

0

9

Select the indicator

Select the indicator

Select the indicator for debits and credits

10

1000000000 to 1999999999

(current year + 1)

Choose Number Ranges/Auto Reversal folder. Choose New Entries. Specify version 100 and the number range (10).

Choose Define Number Range. Choose Insert interval icon and enter data as listed above. Save the number range.

Save your entries.

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9-1-3 Define a new task for the adjustment entry and insert the task in the existing task group.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Manual Posting o Define tasks Choose New entries and create the task STD POST. Select this task and double-click Document Type Assignment folder. Choose New Entries and specify the following:

Field/Data Type Value

Effective year

Effective period

Document type

current year

12

10

9-1-4 After saving these entries, add task STD POST as a New Entry to task group DATA.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Define Task Group

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9-1-5 In the application, run the data monitor and execute the adjustments task for consolidation unit A by placing the cursor at the cross section between unit A and the STD POST task, and choosing Update run. Enter document header text and then select Line Items tab.

Field/Data Type Value

Item 191500, Subitem 220

Item 311950, Subitem 0003

–100

100

Save and make a note of the document number when it is displayed on the status line.

To display the document, from within the data monitor, choose:

Menu Path: Goto o Journal entries

Select the following:

Field/Data Type Value

Dimension

Consolidation group

Consolidation unit

Version

Fiscal year

Period

Document type

Posting level

Chart of accounts

(group-specific)

G1

A

100

current year

12

10

10

(group-specific)

After confirmation, the selected document will be displayed.

An alternative way of displaying the document is to directly select the document number that was displayed on the status line when the adjustment was posted. To do this, choose:

Menu Path: Accounting o Enterprise controlling o Consolidation o Data Collection o Manual posting o Display

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9-2 Reversal:

To enter a reversal against an already posted document, run the STD POST task from the data monitor for cons unit A by choosing Update run.

or, in the application menu go to:

Menu Path: Accounting o Enterprise controlling o Consolidation o Data Collection o Manual posting o Enter

Under Copy from enter the document number of the entry you posted beforehand, and select the Reverse flag.

After entering a header text for the reversal, choose the Line Items tab. Reverse this document by choosing Post (or Update).

Finally, block the task STD POST for the entire group by placing the cursor at the cross section between the task and consolidation group G1, and selecting Block.

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z Translation methodsz Currency translation keysz Determination of exchange ratesz Translation and rounding differences

Contents

Currency Translation

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Currency Translation - Topic Objectives

z Define a currency translation method

z Define selected items, which you require for anupdate of currency translation differencesaffecting net income

z Execute the task currency translation in the datamonitor

At the conclusion of this unit, you will be able to:

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Consolidation Steps

Create master data

Standardizing entries for corporate valuation of data

Currency translationCurrency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information System

Basis: Individual financial statements in different currencies

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Currency Translation - Business Scenario

z Financial data reported by consolidation units iscollected in the Consolidation application in localcurrency

z The local currency of a consolidation unit is not thesame as the group currency

z You need to translate this data into group currencybefore you can create consolidated financialstatements

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Currency Translation

Translation setsTranslation sets

InventoryFixedassets

ExchangeExchange rates rates

CurrentrateHistorical

2000

Diff: Currency translation differences

Local Reference Group Diff.

Fixed assets S = 2.0 H = 3.0 1.0

Buildings 500 1000 1500 500

Machinery 500 1000 1500 500

Inventory S = 2.0 S = 2.0

Raw mat. 500 1000 1000 0

��The currency translation task enables you to translate financial data reported by consolidation units in their local currency into the currency of the consolidation group.

��Currency translation is based on translation methods. You can define several methods for translating data reported by your consolidation units. You can assign every consolidation unit by time period and version.

��The type of currency translation you use depends on the relationships between your corporate group and its individual consolidation units (functional currency).

��You can define any of the commonly-used translation methods for your chart of accounts (temporal method, current-rate method, and so on).

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Currency Translation - Customizing Elements

Consunit

Translation method

Method entries

Translation/rounding

differences

Translationkeys

Exchangerates

Sets:

• FS items

• Subitems

Cons chart of accts

Translation ratios

Exchange rate types

Exchange rates

Reference exchange rate

Selected FS items

��Translation methods specify the exchange rate used for translating certain items, and how any subsequent translation or rounding differences are to be handled.

��Translation methods are assigned to consolidation units in their master data.

��Item sets are ranges of items that are translated using the same translation key and exchange rates.

Example: Fixed assets Translated using historical rates Current assets Translated using current rates Income statement Translated using average rates

��If you want translation differences to be posted with an effect on net income, you need to create selected items for automatic posting. These are typically items for retained earnings/net income in the income statement and balance sheet.

��You store exchange rates for exchange rate types in the exchange rate table. Exchange rate types are a combination of the translation version and the exchange rate indicator.

��Translation methods are dimension-dependent.

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Currency Translation Keys

0 Translation resulting in consolidated value of zero

1 Trans. of cumulative local values at rate for current period (exchange rate table)

2 Historical translation by year of acquisition (exchange rate table)

3 Historical translation using changes in investments table

4 Historical translation using changes in investee equity table

5 Translation by period at applicable rate for each period (exchange rate table)

6 No retranslation of existing group currency value

7 Translation with user-defined exchange rate determination

9 Translation of transaction currency values at rate for current period (ER table)

A Translation of transaction currency values by period with rate for each period (ERT)

��Different financial statement item sets are usually translated using different exchange rates. You use various combinations of the currency translation key and the exchange rate indicator to determine these exchange rates.

��The currency translation key determines the base currency for translation, the table used to find the exchange rate, and the procedure for calculating group currency values.

��The currency translation keys are fixed and cannot be changed (exception: translation key 7).

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Comparison of Translation Keys 1 and 5

Periods 1 2 3 4 5 6 ...

Local currency 100 150 250

Exchange rate 2.0 3.0

Group currency 200 550 750

Group currency 200 450 650

Translation key 1Translation key 1

Translation key 5Translation key 5

...

...

...

��The following example shows the differences in the translation of values with translation keys 1 (period end rate) and 5 (monthly rate).

��The period values and period rates are portrayed as initial values.

��Translation key 1

• Period 1: LC 100 * 2.0 = GC 200 This value is posted.

• Period 6: LC 250 * 3.0 = GC 750 The total annual value is translated here. 200 has already been posted, only the rest of GC 550 is booked in period 6.

��Translation key 5

• LC 100 * 2.0 = GC 200

• LC 150 * 3.0 = GC 450 Here, only the respective monthly value is calculated and posted.

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Determination of Exchange Rates

Exchange rate Exchange rate indicatorindicator

Exchange rate Exchange rate typetype

Time-dependent

Version-dependent

0

1

2

3

4

5

6

7

9

A

Time-dependent

11(Current exchange rate)(Current exchange rate)

10011001(Version100, Exchange (Version100, Exchange

rate indicator 1)rate indicator 1)

Period endrate

Exchange rateExchange ratefrom tablefrom table

DDMMYYYYDDMMYYYYEUREUR3.03.0

Currency translation key

��Translation keys 1, 2, 5, 9, and A require the entry of an exchange rate indicator.

��The exchange rate indicator specifies whether the current rate, average rate, historical rate, and so on, is used. You assign the exchange rate indicator to the exchange rate type, time and version-dependent. The exchange rate type is the key, under which you define the exchange rate in the system.

��When you configure the currency translation, you have defined the consolidation version in the global parameters. The consolidation version contains the currency translation version. All Customizing settings are stored under this special version. As a result, you can also use these settings in other consolidation versions.

��The exchange rate table contains a validity area and the currency exchange rate, per exchange rate type.

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Individual FS: Translation into Group Currency

Revenue 4000-

Expense 1000

*** ANI 3000-

Transfer B/Sheet 3000

Individual FS: P&L

Translation into Group Currency

Step 1:Translate using ref. exch. rate 2.0

Step 2:

Determine CTD between ref.exchange rate and specialexch.rate acc.to the method entry:

Average rate 1.5Current rate 2.0

Revenue 8000-

Expense 2000

*** ANI 6000-

TransferB/Sheet 6000

Revenue 6000- (CTD 2000-)

Expense 1500 (CTD 500)

Diff 1500-

*** ANI 4500- 1500- from diff

TransferB/Sheet 6000

Difference

1500-

CTD: Currency translation difference

Step 3:Annual net income in exchangerate difference I/S 1500

EC-EC-CSCS

��The individual financial statement values are first translated using a reference exchange ratethat you assigned to the translation method by specifying a reference exchange rate indicator. This ensures that all the items from the balance sheet and income statement are translated consistently

��If, during currency translation, you want to translate certain items using particular exchange rates (such as the income statement using an average exchange rate), this will result in translation differences between the translation using the reference exchange rate and that using the average exchange rate

��Reference exchange rate ind. ’*’: This entry means that the values that already exist in group currency are used to determine the translation differences. As a rule, group currency values already exist if you use the automatic data transfer for realtime updates, periodical extracts or rollups

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Treatment of Differences Not Affecting Net Income

Ref. exchange rate

DifferenceDifference

1000-1000-

Assets20002.0

Translation into group currency

Individual financial statements: Balance sheet

Assets Owner equity1000 1000-

... Revenue 3000-

2.400

Balance sheet

3.0 Equity 2000-...

Diff. 1000-1000-

Revenue 6000-

Posting record:Posting record:

Asset portfolioAsset portfolioin diff.in diff. 10001000

Diff: Currency translation difference

EC-CSEC-CS

Historical rate

Assets 2000

+ Diff.+ Diff. 10001000

...

Assets3000

��When the FS items of the annual statement of accounts are not calculated with a standard exchange rate, currency translation differences occur. These can be posted not affecting net income or affecting net income.

��Not affecting net income: Both balance sheet and income statement differences arising from currency translation are allocated, within the balance sheet, with an owner equity item.

��You can determine how you want net income and retained earnings to be affected, by selecting certain differential items for the translation item sets in the translation method.

��Typically, only translation differences in the balance sheet are posted with an effect on net income and retained earnings. In US GAAP accounting, differences in the income statement are posted back to the balance sheet.

��Translation differences in the income statement are typically posted to an income statement item, and affect neither net income nor retained earnings.

��You also have the following options for posting translation differences:

• Post with subitems

• Break down differences by partner unit or transaction currency.

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Treatment of Differences Affecting Net Income

2.400

Revenue 8000-

Expense 1500

Balance sheet

TA

Mach. & Equip.3000Inventory ...

Diff/B/S 1000-

Diff/I/S 1500-

*** ANI 9000-

2

1

3

Asset portfolio in revenuefrom diff. 1000

Annual net income in diff. I/S 1500

1

Annual net income in ret. earnings 90003

Posting record:

2

Income Statement

EQ 2000-

... ...

ANI 8000-Diff/B/S 1000-

B/S with exch. rate inmethod entry

Difference1000-

B/S with ref. exch. rate

Difference1500-

I/S with exch. rate inmethod entryI/S with ref. exch. rate

1

2

��When, in the Customizing of translation methods, you define that balance sheet currency translation differences are to be posted to items in the income statement, an imbalance then occurs in the balance sheet and in the income statement, from the posting. This financial statement imbalance should usually flow into the annual net income and retained earnings.

��When posting translation differences with an effect on net income, you want to differentiate between translations within the first translation affecting net income and translation affecting net income in subsequent periods: During first translation, the entire translation difference is posted with an effect on net income. During subsequent translation, only the change in the translation difference since first translation can be posted with an effect on net income.

��In the system, a differentiation between first and subsequent translation with an affect on net income is made by means of selected items. The system uses this selected item to store the translation differences from first translation. On subsequent translation, it calculates the change in translation differences internally and posts this amount. You specify selected items (among them the statistical item for currency translation affecting net income) in the section translation Customizing.

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Example for Different Translations

Translation entries in Customizing

2.400

Receivables 200

Comm stock 2500-

Ret. earn. 400-

2.400

Balance sheet

Receivables 100

Comm stock 1250-

Ret. earn. 200-

Assets

Open.bal. 750

Acquis. 600

Ref. exch. rate ind. 5

(Curr. exch. rate 0.5)

2.400

Balance sheet

Receivables 100

Comm stock 1000-

Ret. earn. 200-

Diff 100-

Assets

Open.bal. 600

Acquis. 600

Difference 250-

Difference 150

Translation according to defined method

1. Translation using reference exchange rate 2. Translation using exchange rate in method entry

Translation key 1

Exch. rate ind. 5

(Curr. exch. rate 0.5) Assets

Open.bal. 1500

Acquis. 1200

Individual FS: Balance sheet

Translation key 4

(Historical value inGC: 1000 USD)

Translation key 6

(Existing value in GC:600 USD)

��Assets: In this example, the FS items of the fixed assets are translated differently: The acquisition cost is estimated with the available value in group currency, mid-year acquisitions are translated at the current exchange rate. Receivables are translated at the current exchange rate.

��Liabilities & Equity: The common stock is estimated with the historical value according to the changes in investee equity. Retained earnings are translated at the current exchange rate.

��The total difference of 100- between translation using the reference exchange rate and using the respective special exchange rate, is cleared in the currency translation difference item on the liabilities and equity side.

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Totals Database - Temporal Translation DifferencesRecord

RER old = 1.5

Value GCReference exchangerate

Value LC 100 11001000

Value GC =Temporal translationdifference fromrevaluation of prior yearrate

RER new = 1.6

1500 160

100

TemporalTemporal trans trans.. diffs diffs

CYYY: Current yearRER old/new:Reference exchange rate old/newLC / GC: Local currency / Group currency

1000 * 0.1 = 100

1660

Difference RER old/new: 0.1

1760

0

2

000/CYYY 012/CYYY

Translationindicators

��You can calculate the temporal translation differences for items without subitems, as the currency translation indicator takes on the function of a subitem.

��For currency translation using currency translation key at period end rate (both 9 and 7), you can calculate temporal translation differences. Up to four database records are generated in local currency from one database record in group currency.

��This is specified in the method entries and separately stored in the totals database using the translation indicator.

��The above example presents records with translation indicator 0 (original record) and 2. The temporal translation difference between the old and the new reference exchange rate is shown here for the prior period value.

��If you do not activate the temporal translation difference indicator, the following records of currency translation are disclosed as follows:

• Original record (translation indicator 0): it shows the transaction period value in local currency and the reference value in group currency

• when the translation method contains another exchange rate indicator, the period value shows the difference between the value in group currency and the transaction reference value (translation indicator 1)

��In drilldown reports you can analyze the effect of the currency translation using the characteristic translation, and display the generated database records per currency translation key.

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Asset History Sheet: Temporal Transl. Diff. Record

Translation of opening balance at current rate of prior yearPost translation difference from (1) totriggering item with subitem transaction typeTotal opening balances

1

2

3

Translation with CER

Total closing balances

4

5

Clos.Bal.Clos.Bal.PYYYPYYY

TranslationTranslationDifferenceDifference

OpeningOpeningBal.Bal.

Acqui-Acqui-sitionssitions Clos.Bal.Clos.Bal.

105 100 120

205 200 220

APC

VA

1 2 3 4 5

......

. . .

. . .

CER: Current exchange rate

��If you translate asset values using the current exchange rate for the current period, and not historically by year of acquisition, then temporal translation differences occur if the current exchange rate changes with a new fiscal year. The closing balance for the prior year no longer corresponds to the opening balance of the current year.

��As the asset items are always defined broken down by subitem, you receive a special record of translation differences using transaction types for the currency translation

��The following subitems (consolidation transaction types) are used in the above asset history sheet:

• 105 Opening balance translation differences

• 205 Value adjustment translation differences

• 100 Opening balance APC

• 200 Opening balance accumulated depreciation

• 120 Acquisitions

• 220 Depreciation

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Asset History Sheet at Current Rate: Method

Itm Set: FS item setSItm Set: Subitem setExR Ind. 1:Current exchange rateTK: Currency translation key

OB: Opening balanceAPC: Acquisition/production costs OBVA: Value adjustment OBTTY: Transaction typeCTD: Currency translation differences

Method No. Itm Set ExRate TK Rate SItmSItm Set Ind. Pr.Year CTD

0001 10 CS01-# 1 T 105APC (OB) only

0001 20 CS01-# 1 T 205VA (OB) only

0001 30 CS01-# 1 1all TTYexcept OB/VA

��You can record the translation difference separately using the subitem transaction type To do this you must have made the following entries when maintaining the currency translation method:

• Ref. exchange rate ind.: Current exchange rate

• Record closing bal. (APC or VA) prior year: For the FS item sets fixed assets and value adjustments specify a subitem set for OB APC, OB VA and a set for all the other subitems

• Thus, only the items values assigned to the subitems OB APC / OB VA specified in the set are translated Fixed assets are translated using the exchange rate indicator Current exchange rate

• If you select Use of prior year rates in the method entry, the prior year translation rate is used. The currency translation posts the translation difference to the triggering items with the subitems for translation differences

��The other activities (acquisitions, retirements, transfers) are defined in the third method entry. The subitem set contains all the remaining subitems

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Rounding Differences

B/S in local currency before translation B/S in group currency after translation

Balance sheet

Liabilities & equityAssets

1,500.01 1,500.00

Balance sheet

Liabilities & equityAssets

1,000.00 1,000.00

Result of rounding check:

Difference

0.01

Checks:

• Values of an item set = 0

• Values of two sets identical

• Values of a set with subitem set identical with another set

CTD - Rounding

0.01

��The translation of financial data can produce differences that are caused by rounding in the system. These differences are not related to translation differences. If rounding differences occur, translated financial data does not pass subsequent validation checks, such as: Total assets = Total liabilities and equity.

��The system calculates these differences and posts them to differential items that you specify in rounding entries. You can define rounding entries as follows:

��For the definition of rounding entries, the following 3 possibilities are available:

• Using an item set. (The values of items in this set must equal zero when added, for example, the corresponding validation checks whether the sum of all balance sheet items is 0.)

• Using two item sets (Check: whether the sum of items in the first set (for example, net income and appropriation of retained earnings) is equal to the sum of items in the second set (for example, retained earnings in the balance sheet).

• Using two item sets, the first of which is restricted to a set of subitems (Check: whether the sum of values for the subitems specified in the first set and values from the second set equal 0. The first set could, for example, contain fixed asset items restricted to depreciation entries, and the second set depreciation expense items in the income statement).

��Note: When you specify a sequence for rounding entries, ensure that no entry invalidates an entry positioned earlier in the sequence. The system only rounds if the criteria in a rounding rule is met in local currency.

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Rounding Entry for Item Reconciliation

Example:Historical translation of retained earnings in the balance sheet

Balance sheet

RE RER

(´97) 2000- (2.0)

(´98) 3000- (3.0)

Expense

30005000- 6000

GC (3.0)

Income statementRE

3000 (´97)

3000 (´98) 1000-

Difference

1000

B/S (LC)

Ret. earnings

1000- (´97)

1000- (´98)

Income statement

RE

3000 (´97)

3000 (´98)

Unappr.ret. earn.

3000-

Revenue

6000-

1000-

5000

Expense

3000

8000 9000-

Income statement

RE

3000 (´97)

3000 (´98)

Unappr.ret. earn.

3000-

1000

Revenue

6000-

1000-

8000 8000

Difference

1000-

2.2. Rounding entryRounding entry

1.1. Rounding entryRounding entry

+

I/S (LC)

Revenue 1000-

Carryfwd 1000-

RE 2000

19981998

RE: Retained earnings

RER: Ref. exchange rate

Expense

3000

��Rounding differences can be used to reconcile financial statement items that should have the same values after currency translation. An example of this is the retained earnings items in the balance sheet and income statement (if you use a chart of accounts with appropriation of retained earnings in the income statement and a reversed debit/credit sign). If varying exchange rates are used, currency translation can cause differences to occur between these financial statement items.

��The example shows the historical translation of retained earnings (with the appropriation of retained earnings shown in the income statement) and the necessity of rounding entries for reconciling the financial statement items. Balance carried forward 1998: Carryforward the balance sheet item of the retained earnings. The retained earnings income statement item is carried forward to the same item in the new year, and (with reversed debit/credit sign) to the unappropriated retained earnings item in the new year. In this way, the income statement is cleared in the new year. Currency Translation: As a result of currency translation, the retained earnings (1997) are translated in the balance sheet at the 1997 exchange rate (2.0), and the retained earnings from 1998 are translated at the 1998 exchange rate (3.0). In the income statement, the total retained earnings are translated at the 1998 exchange rate (3.0). Item reconciliation between the retained earnings items in the balance sheet and income statement: The difference is posted to the retained earnings item in the income statement with the corresponding debit/credit sign. The second reconciliation corrects the value of the unappropriated retained earnings item. Reconciliation of the entire income statement establishes a difference of 1,000 units, which is then posted to unappropriated retained earnings, thereby balancing the income statement.

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Customizing Currency Translation

Assign the tasks to your task group

Define task for validation of group currency data

Maintain exchange rate table

Specify exchange rate ratios

Define ex. rate indicators and assign ex. rate types

Define selected items

Assign translation methods to units

Define, check, and activate translation methods

Define currency translation task

CU

STO

MIZ

ING

CU

STO

MIZ

ING

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Currency Translation - Process Flow

Execute and block validation task for reported financial data

Enter additional financial data (investments/equity)

Enter reported financial data

Data collection

If no errors are detected, block the translation task

Analyze the audit trail

Execute currency translation task

Currency translation

Execute and block validation task for group currency data

Check/maintain exchange ratesMO

NIT

OR

MO

NIT

OR

��Currency translation can be carried out "provisionally" or "finally".

��"Provisional" translation is primarily required in order to generate balance reconciliation lists in group currency for the interunit elimination task that follows. The type of translation run depends on the system settings and the status of preceding tasks in the monitor.

��The system runs a "provisional" translation (which cannot be blocked) in the following situations:

��If you have defined the translation method and specified exchange rates, however you have not yet checked and activated the method. If you have not yet executed the task for validating reported financial data and/or not blocked this task.

��Both "provisional" and "final" translation can be rerun, for example if reported data is subsequently modified. Previously calculated values are simply overwritten with new ones. Restrictions exist with reference exchange rate indicator ’*’.

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Currency Translation - Unit Summary

z Define a currency translation method

z Define selected items, which you require for anupdate of currency translation differencesaffecting net income

z Execute the task currency translation in the datamonitor

You are now able to:

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Currency Translation Exercises

Unit: Currency Translation

After completing these exercises, you will be able to:

• Define a currency translation method

execute the task currency translation in the data monitor

• In exercise 1-4 you already defined that all consolidation units disclose their financial statements in group currency. Exception:

Consolidation unit D reports its data in the local currency UNI.

After defining and assigning a translation method, you demonstrate currency translation using consolidation unit D as an example.

1-1 Translation method

1-1-1 Translation entries

Define the translation method XY-01 (where XY stands for the chart of accounts) using reference exchange rate indicator 5 (= current rate).

The sets you need begin with the letter for your group (A for group 01, etc.) and a hyphen (X-...).

Example: Group 01: Set A- Group 10: Set J- Group 18: Set R-

The suffix consists of the FS item number, the subitem, or the from FS item number.

Make the following settings in the method:

Exchange rate indicators: 5 = current rate / 6 = average rate

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Enter the following:

Field/Data Type Value Translation entry 010: FS item set: X-191500 Subitem set: X-100 Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From: 191500 From: 100 6 250910 6 120

Translation entry 020: FS item set: X-191500 Subitem set: X-999 Exchange rate indicator Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From: 120 To: 299 5 1 250910 6 120

Translation entry 030: FS item set: X-170100 Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From : 170100 To: 170400 3 250920 6 120

Translation entry 040: FS item set: X-250100 Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From : 250100 4 250930 6 120

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Translation entry 050: FS item set: X-299999 Exchange rate indicator Translation Key Translation differences: Item (debit/credit) Subitem category Subitem Transaction Currency

From: 100000 To: 170099 From: 170401 To: 191499 From: 191501 To: 250099 From: 250101 To: 299999 5 1 250940 6 120 Check the Default box

Translation entry 060: FS item set: X-389999 Exchange rate indicator Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From: 300000 To: 389999 6 5 250930 6 120

Translation entry 070: FS item set: X-390000 Exchange rate indicator Translation key Translation differences: Item (debit/credit) Subitem category Subitem

From: 390000 6 5 251200 6 120

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2-1 Rounding rules

Define the following rounding rules in the sequence listed:

• Annual net income in the balance sheet and income statement: differential item 251200 Retained Earnings - Current Year, subitem 120 Additions

• Balance sheet:

• differential item 250950 Currency Translation Adjustments - Rounding, subitem 120 Additions

• Income statement

• Differential item 321300 Currency Translation Difference, I/S

Field/Data Type Value

Rounding entry 010:

FS item set: X-251200-390000

Rounding differences:

Item (debit/credit)

Subitem category

Subitem

Value: 251200

Value: 390000

(NOT A RANGE!)

251200

6

120

Rounding entry 020:

FS item set: X-200000

Rounding differences:

Item (debit/credit)

Subitem category

Subitem

From: 100000

To: 290000

250950

6

120

Rounding entry 030:

FS item set: X-300000

Rounding differences:

Item (debit/credit)

From: 300000

To: 399999

321300

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2-2 Assignment: Assign the translation method XY-01 (where XY stands for the chart of accounts) to consolidation unit D in the master record.

• You will use the data monitor to carry out currency translation for consolidation unit D. You therefore need to define one more task.

2-3 Defining tasks:

Call the currency translation task CURR TRAN and assign it to task group DATA.

Make sure that currency translation is automatically blocked after it is executed successfully.

2-4 Run currency translation for consolidation unit D in the data monitor, and examine the audit trail.

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Unit: Currency translation Topic: Validation II

After completing these exercises, you will be able to:

• Run a validation of group currency values in the data monitor

• The currency translation task translated the reported financial data of consolidation unit D into USD.

• You will use a validation to make sure the reported data is consistent. You will execute the task to validate standardized financial data in the data monitor.

3-1 Executing a validation

3-1-1 After the task Validate Standardized Data runs without finding errors, you want it to be blocked automatically.

Ensure that the appropriate settings have been made in the task group.

3-1-2 Execute the validation in the data monitor.

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Currency Translation Solutions

Unit: Currency Translation

1-1 Translation method:

1-1-1 Translation entries:

To define a translation method, you choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Automatic Posting o Currency Translation o Translation Methods o Define Currency Translation Methods

1. Choose and make New entries

Field/Data Type Value

Translation method

Description

Reference exchange rate ind.

XY-01 (XY = chart of accounts)

Translation method Gr. XY

5

Save your entries.

2. Double-click Method Entries folder.

• Choose New entries to define the individual method entries.

• Assign the number 010 to the first entry.

Number all subsequent entries sequentially in further increments of 10.

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3. In the FS item set block, name the first item set X-191500 (where X = the letter for your group (A for group 01, E for group 05,etc.)). This set should only contain the item “Fixed Assets”, restricted to the opening balance.

Choose Maintain sets to go to the set definition. Enter a useful description.

• Enter the item 191500 in the From value column, and save this entry.

• Place the cursor in the field Subitem Set in the frame for selecting subitems.

Enter the set name X-100 (where X = the letter for your group) and press Enter.

Choose Maintain sets to go to the set definition

Enter a useful name.

Enter the subitem 100 in the From value column. Save your entries.

4. In the Type of currency translation frame, specify the currency translation key 6.

The Translation differences frame contains the item 250910 for both debits and credits and press Enter. Enter subitem 120 for both debits and credits..

Save the entries for the first method entry.

Use the same procedure for the other entries. Choose the Next Entry icon to create the next method entry.

The data to be entered is listed on the next page. Note that you have already entered data for entry 010.

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Enter the following:

Field/Data Type Value

Translation entry 010:

FS item set: X-191500

Subitem set: X-100

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From: 191500

From: 100

6

250910

6

120

Translation entry 020:

FS item set: X-191500

Subitem set: X-999

Exchange rate indicator

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From: 120

To: 299

5

1

250910

6

120

Translation entry 030:

FS item set: X-170100

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From : 170100

To: 170400

3

250920

6

120

Translation entry 040:

FS item set: X-250100

Translation key

Translation differences:

Item (debit/credit)

Subitem category

From: 250100

4

250930

6

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Subitem (debit/credit)

120

Translation entry 050:

FS item set: X-299999

Exchange rate indicator

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

Transaction currency

From: 100000

To: 170099

From: 170401

To: 191499

From: 191501

To: 250099

From: 250101

To: 299999

5

1

250940

6

120

Check off the Default box

Translation entry 060:

FS item set: X-389999

Exchange rate indicator

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From: 300000

To: 389999

6

5

250930

6

120

Translation entry 070:

FS item set: X-390000

Exchange rate indicator

Translation key

Translation differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From: 390000

6

5

251200

6

120

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1-1-2 Rounding rules

Rounding rules are defined in the same way as translation entries, but you also need to select the Rounding entry indicator.

Define the following rounding entries:

Field/Data Type Value

Rounding entry 010:

FS item set: X-251200-390000

Rounding differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

Value: 251200

Value: 390000

(NOT A RANGE!)

251200

6

120

Rounding entry 020:

FS item set: X-200000

Rounding differences:

Item (debit/credit)

Subitem category

Subitem (debit/credit)

From: 100000

To: 299999

250950

6

120

Rounding entry 030:

FS item set: X-300000

Rounding differences:

Item (debit/credit)

From: 300000

To: 399999

321300

1-2 Assignment

Assign the translation methods that you defined for consolidation unit D for version 100, effective 12/2000 by choosing:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Automatic Posting o Currency Translation o Translation Methods o Assign Translation Methods to Consolidation Units

Save your entries

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1-3 Defining tasks:

To define task CURR TRAN, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Automatic Posting o Currency Translation o Define Task Choose New entries, and enter CURR TRAN as the name of your task and Translation as the task description (both short and medium text). Task category is Currency Translation.

Save your entries.

Assign this task with a New Entry to the task group DATA for the data monitor by choosing:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data monitor o Define Task Group

Select Automatic blocking when you assign the task to the task group.

Save your entries.

1-4 Executing a task:

Run the task from the data monitor by placing your cursor at the cross-section between consolidation unit D and the translation task.

Choose Update run. Currency translation was only carried out for consolidation unit D.

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Unit: Currency translation Topic: Validation II

2-1 Task:

To check the definition of the task group, choose:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Define Task Group Select task DATA and go to the detail screen Assign tasks to task group.

You can see that you already defined the task GROUP VAL and assigned it to the task group. You also already selected automatic blocking after successful execution for this task.

Assign the validation rule that was defined in exercise 8-1 to the consolidation units for validating the standardized financial data for period category 2:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Validations for Reported and Standardized Financial Data o Assign Validations to Consolidation Units

Run the task in the data monitor (application) by placing your cursor at the cross-section between consolidation group G1 and the task for validating group currency (consolidated values), and choosing Update run.

Once the task is completed, it is automatically blocked for all cons units on the cons group level.

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Consolidation Functions

z Interunit Eliminationz Consolidation of Investmentsz Reclassifications

Contents

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Consolidation Functions: Unit Objectives

z Define the tasks, methods and document typesrequired to carry out interunit eliminations and theconsolidation of investments

z Determine to what extent you want to useconsolidation of investments

z Execute different types of interunit eliminations,consolidation of investments andreclassifications

At the conclusion of this unit, you will be able to:

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Consolidation Steps

Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit eliminationInterunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investmentsConsolidation of investments

Consolidation of investmentsReclassificationsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

Information system

Basis: Individual financial statements in different currencies

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Business Scenario

z In this step you present the elimination ofintercompany payables and receivables

z Interunit elimination is one of the consolidationtasks that you run after you have translated localcurrency data and posted standardizing entries

z You decide to run all of the elimination tasks in theconsolidation monitor so that you can benefit fromits visual status display.

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Consolidation Functions

Elimination ofIU revenue/expense

Elimination ofinvestment

income

Interunit Elimination

Consolidation ofInvestments

Elimination of IU pay./rec.

A

B C

D

80% 16%60%

E

75% 16%

��Creating consolidated financial statements: “The consolidated financial statements present the assets, financial position and income of a consolidating group as if for a single organization.” (§297 Clause 3 Section 1 of the HGB, German Commercial Code) The consolidated financial statements are balanced and valuated according to the laws governing the parent company.

��It is necessary to eliminate all transactions based on the delivery of goods and services which took place between internal trading partners. Interunit elimination covers the following tasks in the consolidation system:

• elimination of interunit payables and receivables

• elimination of interunit revenue and expense

• elimination of investment income

��Consolidation of investments: Elimination of parent investment against the amount of the subsidiary stockholder’s equity which is ascribed to it. (§ 301, 307, 309 HGB, German Commercial Code) The consolidation of investments method used depends on the amount of influence exercised within the group.

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Elimination of Interunit Profit and Loss (Procedure)

Aggregated Balance Sheet

250

400

IC receivablesFxd assts

Inventory10050

Equity120

400

280IC payables

Group Balance Sheet

250

300

Fxd assts

Inventory 50

Equity

300300

280280

2020Retainedearnings

��A consolidated balance sheet shows only payables and receivables which relate to non-affiliated companies. Payables and receivables resulting from goods and services transactions within the corporate group must be eliminated.

��You can use custom characteristics to restrict the values to be selected for the elimination of interunit payable and receivables to particular consolidation and partner units. For example when you divide your consolidation units into manufacturing companies and financial institutions, then you could restrict the elimination to a type of company, in order to study the elimination differences separately.

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Interunit Elimination

World

Asia-PacificAmericaEurope

Japan (JP)France (FR)Germany (DE)

Item Amount Partner

Rec. 20 FR. . .. . .

Rec. 50 JP

Item Amount Partner

Payb. - 20 DE

Item Amount Partner

. . .

. . .

Payb. - 60 DE

��Interunit elimination is based on information about the partner consolidation unit.

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Interunit Elimination

Dimension

TaskTask

Method Doc.type

Effective from year and period

TaskTask group groupConsolidationversion

Task version

ConsolidationConsolidation Monitor Monitor

��You define tasks and methods for IU eliminations in Customizing. You should create a task for each of the interunit consolidation procedures, for example, elimination of interunit payables and receivables or revenue and expense. In a method, you specify which items are to be mutually eliminated and how you want to handle any resulting differences.

��You execute IU elimination tasks from the consolidation monitor.

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Interunit Elimination Method

Interunit Elimination MethodInterunit Elimination Method

FS Item Sets Further control options

Pair ofsets

Set 1 Set 2

Items for currency-related differences

Items for otherdifferences

Debit Credit

Debit Credit

• Difference strategy

• Threshold value

• Splitting of elimination

differences

• One-sided elimination

• Post to initiating cons

unit

• Document per subitem

��You can create multiple pairs of FS item sets for each IU elimination method. The first set in the pair contains the FS items for elimination; the second set contains the corresponding offsetting items. These pairs of FS item sets represent a trading partner relationship.

��To restrict the item values to be eliminated, you can specify the following characteristic values: Subassignments, consolidation or partner units and their attributes, document type. The selection is restricted to those units that have these attributes, or to the data records that have been posted with these document types

��The following strategies are supported for posting elimination differences against one of the units in a pair:

• FS item sets: Differences are posted against the unit that reports data for a selected item set

• Lower/higher value: Differences are posted against the unit reporting the lower/higher absolute value

If you enter a threshold value, no entry is posted if differences are above the specified amount. You can only split differences into currency-related and other differences if financial data is reported in both transaction and local currency.

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Database prior to Interunit Elimination

B/Sheet

Receivables A to B 1000 USD

Receivables B to A 500 USD

Payables B to A 1200 USD

Payables A to B 400 USD

a)

b)

Partner relationships a) and b)

FSFS item item

Receivables

Receivables

Payables

Payables

CUCU

00

00

00

00

ValueValue

1000

500

-400

-1200

Cons unitCons unit

A

B

A

B

PartnerPartner Unit Unit

B

A

B

A

ECMCT prior to interunit elimination

��A separate posting level (20) is used for two-sided elimination entries. These entries are based on the items for elimination that you specify in Customizing and the partner account assignments of the financial data concerned.

��The system generates an elimination entry in the following cases:

• A consolidation unit reports a value for an FS item requiring elimination.

• Another consolidation unit is assigned as the trading partner for this value.

• You have specified that both of the above consolidation units are to be included in IU elimination.

��The system differentiates elimination entries according to trading partner relationships, as follows: A pair of consolidation units is always looked at and within this pair a pair of FS item sets

��Elimination documents contain an entry for each partner relationship, broken down by transaction currency, if requested.

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Two-Sided Elimination Entries

Interunit Elimination MethodInterunit Elimination MethodTable view Edit Goto Selection criteria Utilities System Help

...Dim. Cons chart/acct Version Period /

Interunit elimination: FS Item Sets

No.01

Set 1Receivables Payables

Set 2 DifferenceOther expense

DifferenceOther revenue ...

New entries ...

FS itemReceivablesPayablesOther revenue

CU202020

Value -1000 1200 -200

Cons unitABB

Partner UnitBAA

ReceivablesPayablesOther expenses

202020

-500 400

100

BAA

ABB

Partnerrelationships:

a)

b)

ECMCT after interunit elimination

��The system posts the values requiring elimination with a reversed debit/credit sign. A consolidation unit and a partner unit are posted against in each line.

��The document type of the elimination entry determines its posting level.

��You specify pairs of item sets for interunit elimination in elimination method customizing. You can use more than one pair of item sets for each method.

��You select a posting strategy in method customizing, in order to specify the consolidation unit against which you want elimination differences to be posted.

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Causes of Elimination Differences

Payables 1 1,500 SFREx.rate = 3.04500 FRF

Cons unit 1(currency USD)

Cons unit 2(currency FRF)

Payables 1200 SFR = 3600 FRF

3600 FRFTranslation into group currency

Payables = 1,440 DEM

Ex.rate= 0.4

Receivables = 4,640 DEM

Ex.rate= 1.6

Receivables 1 1,500 SFREx.rate = 0.6

900 USD

Invoice not (fully) recognizedInvoice not (fully) recognized

Reversal 300 SFR Ex.rate = 3.0

900 FRF

Receivables 2 2,000 USDGoods under way (different posting date)Goods under way (different posting date)

Difference ofDifference of3,200 !3,200 !

Translation differencesTranslation differences

Rec. SFR 1500 USD 900Rec. USD 2000 USD 2000

USD 2900

��Corporate policy usually specifies procedures for handling temporal posting differences, individual value allowances for receivables, and incomplete recognition of payables.

��Currency translation differences can be calculated in EC-CS, provided units report financial data in both transaction and local currency. This is automatically the case if you collect data from Financial Accounting.

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Splitting of Elimination Differences

Elimination Sets

Handling of differences

Elimination ofLoans

Elimination ofInterest Revenue

Elimination ofInt.Bus.Volume . . .

Elimination ofIU Pay. and Rec.

Balance reconciliation

ITM CU2 CU3 TC

REC. 230 115

PAY. 200- 110-

30 5

10

30 - 10 = 20

Currency-relateddifference

Otherdifferences

ExRt= 2.0

CUNR PART GC DIF

CU1 CU2 500 500- 0

CU1 CU3 120 100- 20

CU2 CU3 230 200- 30

Difference

��A splitting of differences is understood as an analysis of the system concerning the causes of elimination differences The system can analyze elimination differences and split them into two categories, depending on their cause. Differences are classified as either currency-related or other.

��The following are prerequisites for difference splitting: Values exist in transaction and group currency. You have selected difference splitting in the definition of the elimination method. You have specified a reference exchange rate indicator for your elimination method. You have created separate differential items for currency-related and other differences. You have specified in the relevant document type that you want elimination entries posted in transaction and group currency.

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��Many items affectedMany items affected

��RelationshipsRelationships//account assignments depend on receiveraccount assignments depend on receiver

��Frequent posting errors forFrequent posting errors for expenses in individual expenses in individual statements statements

Inc.statement

B/Sheet

��Clear overview ofClear overview of IU IU trading partner relationships trading partner relationships

��Few items affectedFew items affected

Assets Liabilities & EquityLoansReceivables PayablesInterest receivable Interest payable

¾�Auditor demands exact reconciliation

Revenue ExpenseSales revenue Materials expenseInterest income Interest expenseOther income Other expense...

¾ Only revenue reported (with breakdown by partner)Expense equal to this revenue assumed for partner

¾ No elimination difference

Simplified Elimination in the Income Statement

��You have the option of running a simplified, one-sided elimination of interunit trading partner relationships. This is used particularly for the elimination of intecompany revenue and expense. In this procedure, the system posts elimination entries based on the values in one financial statement (FS) item set only.

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Mail Assignmt(ref. no.)

NotesElimination entry

Eliminationmethod

Accountingdocument

Cust./vendormaster

Customer/vendor

Document matching

CoCd 1 / CoCd 2, Ref.no. 4711

Document date: 3/22/96

EC-CS Consolidation

Itemdetails

Bal. 2Bal. 1 Diff.

CU A / B

CU A / CCU B / C

Elim. of IU payb. & rec.

Drill-down

Yet to be assigned:

CoCd 1 CoCd 2

Preparation of individualfinancial statements

- 10001200 200

700- 600 100- 350400 50

Cons unitmaster record

Document Reconciliation

��The reconciliation of group-internal payables and receivables is an often time-consuming procedure during the preparation of consolidated financial statements. SAP’s Financial Accounting application enables efficient document matching to be run during the fiscal year, thereby reducing the time required for the elimination.

��The consolidation user responsible for a particular company code specifies one or more "partner" company codes with which reconciliation is to be run. By reading the company assignments in the customer and vendor master records, the system selects and displays all open items.

��Document matching comprises the following steps:

• Documents with the same group reference number and value are automatically recognized as belonging together.

• The system then sorts into groups those documents posted with the same document date, whose values differ below a tolerance defined by the user.

• The remaining documents are displayed in two windows and processed manually by the user (by means of mails to other users, notes, subsequent maintenance of reference number).

��The document matching program can also be called up directly from balance reconciliation after elimination of IU payables and receivables, so that the consolidation user can also drill down to FI documents.

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Consolidation of Investments

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HierarchyHierarchy Reported DataReported Data

A

B

C D

80%

75%60%

R/3R/3

DocumentsDocuments

CustomizingCustomizingCoICoI

z Purch. method

z Book value

z GW amort, 10 yrs

z Standardizeddata

MethodMethodAssignmentAssignment

ActivityanalysisConsolidation

ofInvestments

G2A

B C D

G1 G1A PURG2

B PURC PUR

SAP Consolidation of Investments

��Simultaneous and Step Consolidation for any type of corporate structure

��Support of US GAAP, IAS and Germany’s HGB

��Treatment of investments, equity, goodwill (with special amortization)

��Automatic recognition of activities or manual entry of activities

��Automatic generation of posting documents

��Processing of almost all business transactions

��Predefined C/I methods included in the standard system

��Parameter selections enable easy definition of customer-specific methods

��Method allocation using inheritance logic for multiple-level groups

��Comprehensive specialized reports and unrestricted reporting

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InvestmentInvestment

A

B

C D

80%

60%75%

Annual net incomefor B, C, D = 100 100

Structure: 1 Consolidation group with all consolidation units

Documents: 1 document per consolidation unit

Group Share 100% 80% 60% 48%

Overall ANI– Min.interest ANI= Group ANI

100 - 20

80

100- 40

60

100- 52

48 = 188

G1G1

AA BB CC DD

Simultaneous Consolidation

��Advantages

• Details of all units are available for analyzing the overall consolidation group.

• Simultaneous consolidation process is more straightforward than step consolidation.

��Disadvantages

• Lack of clarity when groups are too large (too much detail).

• Parallel sub-consolidation groups are possible for reporting purposes, but generally pose the risk of being inconsistent with the overall group.

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InvestmentInvestment

A

B

C D

80%

60%75%

Documents: 1 document per unit in the lowest group1 summary document per higher-level group

G2G2

BB CC DD

G1G1

AA G2G2

Group Share

= 235

100% 75% 60%

1000

100

100- 25

75

100- 40

60

Overall ANI– Min.interest ANI= Group ANI

Annual net incomefor B, C, D = 100 100

Structure: Hierarchical consolidation groups

= 188

80%235- 47188

Overall ANI– Min.interest ANI= Group ANI

Group Share 100%

Step Consolidation

��Advantages

• Improved clarity when groups are very large

��Disadvantages

• Consolidation units of different sub-groups do not share common details.

• When network-like investment structures are involved, disclosures and computations are much more complex than in simultaneous consolidations (for instance the change of methods in the hierarchy, or re-interpretation of activities).

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= - 47

Group share G2

Overall ANI– Min.int. ANI in G2

Group share G1

– Adj. min.int. in G1= Group ANI

100% 75% 60%

1000

100- 25

100- 40

80% 60% 48%

- 2080

- 1560

- 1248 = 188

G2G2

BB CC DD

G1G1

AA G2G2

Structure: Any consolidation groups

Documents: 1 document per unit (B,C,D) in each CG (G1,G2)

Advantage: maximum detail for subsequent analysis

InvestmentInvestment

A

B

C D

80%

60%75%

Annual net incomefor B, C, D = 100 100

Stepwise Simultaneous Consolidation

��Stepwise simultaneous consolidation unites the advantages of simultaneous and step consolidation:

• Details of each consolidation unit

• Details at each level of consolidation

��EC-CS supports stepwise simultaneous consolidation.

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Customizing

Method assignment

Consolidation of Investments Methods

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Overall FunctionalityOverall Functionality

Methods

incl

uded

in th

e st

anda

rd s

yste

m

thre

e-le

vel c

usto

miz

ing

Goodwillz Pur.{Sharesz Equity

z Amortization{Direct elimination{Per. reduction

z Equity agingz Appropriation

Calculation base Earnings, Equity{Reported Dataz Standardized data{Consolidated data

SystemUtilization

GlobalSettings

Direct shares/Group sharesGoodwill life/start date

FS itemsSubitems

Custom C/I MethodsmodifiedC/I Methods of SAP

MethodDefinition

Miscellaneous

Customizing SAP’s Consolidation of Investments

z Reported equity data{Additional data

1

3

2

��When implementing the software, you have three options:

• You can use the C/I methods as delivered by SAP.

• You can modify the C/I methods to meet your requirements (e.g., specify different FS items or life of goodwill).

• You can define new C/I methods.

��You go through several steps to choose the functionality you need and to customize the settings. This ensures that functions no longer needed (such as no proportional consolidation) can be recognized at very high level.

��The SAP Implementation Guide (IMG) describes each of the steps in the setup process. Functionality and business background of the SAP consolidation of investments are explained in detail on the the CD-Rom Knowledge Product ‘SAP Consolidation of Investments‘.

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Define accounting techniques

Select/deselect equity aging

Appropriation of retained earnings

Handling• Goodwill• Neg. stockholders’ equity• Hidden reserves

Checked during methoddefinition

Definition in global settings

Definition of selected itemsin Customizing

Definition in global settingsor method definition

Consolidation of Investments Utilization

1.

��Selection of accounting techniques to be used. According to this selection a check is made for the method definition as to whether this accounting technique is eligible

��When equity aging is chosen, the related global settings, such as net display and subitems are made.

��If you determine that retained earnings appropriations are to be automatically posted, the associated selected items in Customizing must be defined. If you do not select this flag, any existing settings are ignored.

��You choose which methods (e.g., amortization, direct elimination) are valid for treating goodwill and negative goodwill. You also determine how the related settings (e.g., goodwill items) are to be defined: globally (see global settings), per method (see method definitions), or by exceptions.

��You decide whether to permit negative stockholders’ equity for the equity method, thus allowing for a negative investment book value. If the purchase method is used, you determine whether to bypass the calculation of minority interest if stockholders’ equity is negative.

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Global Settings

Origin of investment and equity dataOrigin of investment and equity data

Scope of the collected data

Handling partial divestitures

Assignment of document types

Dependent on system utilization

Treatment of goodwill / negative goodwill

Financial statement items

Origin of data for the equity method

2.

Equity aging report Net or Gross Display?

Maintain Subitems forEquity Aging Report

��The investment data is obtained from the additional financial data. The equity data is obtained from the totals database and/or the additional financial data. You determine what kind of data (calculation base) is processed by the consolidation of investments: reported financial data, standardized financial data, etc. If the equity method was chosen in system utilization, you determine from where the related data is obtained: from the reported equity data or additional financial data.

��You define how to treat direct or indirect partial divestitures with respect to revenues and expenses. You also determine how the document types are to be assigned (via tasks or via activities/accounting technique).

��If C/I utilization is set to "global", you define the properties of the following fields: goodwill amortization and life, new goodwill, threshold value, equity aging, negative stockholders’ equity. If the treatment is "global", on the FS item detail screen you define the chart of accounts-based settings for posting goodwill or negative goodwill.

��When equity aging is chosen, you define in the global settings if you want net or gross display of equity aging. In a separate step, you maintain the subitems for the activities:

• Net display:subitems for the equity / subitems for minority interest in investments if you use one or more methods that calculate acquisitions using group shares.

• Gross display: define the subitems per activity for the group and the subitems for minority interest.

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Consolidation of Investments Method

Calculation of additionsDependent on system utilization

Treatment of goodwill/negative goodwill

Financial statement items

Accounting technique

3.

��You define one consolidation of investments method for each valid accounting technique (checked against C/I utilization settings).

��You choose between calculating additions using the direct share or the group share (that is, according to IAS and US GAAP, or according to German HGB).

��You define the treatment of goodwill/negative goodwill. For each method you choose either amortization, direct elimination, or periodic reduction. You also define the life of goodwill amortization, the date of new goodwill, and the threshold value.

��Pushing the "FS items" button takes you to the chart of accounts-based settings for posting goodwill/negative goodwill. In rare cases, these values are already defined by the global settings. Here you can also define a stat. FS item for goodwill (such as 933100 Stat: Positive Goodwill) that requires an account assignment category with partner. This item is used for changes in indirect investments.

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A

D

B C

InvestmentInvestment Method assignmentMethod assignment

G1 Pur.

A 100% Pur. ______

B 80% Pur. ______

C 80% Pur. ______

D 60% Pur. ______

E 50% EQUI Pur.

F 90% Pur. ______

H 80% Pur. ______

Units Direct Method Prior Period

F HE

80 8010

25

3080

25

6050

Group G1 SingleSingle maint maint.. Downward Downward inheritanceinheritance ExceptionsExceptions

SharesShares ((DefaultsDefaults)) PriorPrior period period

Method Assignment for Simultaneous Cons.

��A consolidation of investments (C/I) method is assigned to every consolidation unit within each consolidation group - by time period and version.

��The method assignment uses an "effective period" approach, which voids the need to re-enter repetitive definitions for each subsequent period, as long as the method remains consistent.

��You can make the assignments easier by assigning one method to the overall consolidation group, and making exceptions for individual units.

��A feature is planned which will automatically propose the C/I methods based on the investment structure. The feature will require certain rules, which will be predefined in the SAP system or will be made available via a user exit and a customer’s program.

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A

B C

InvestmentInvestment Method assignmentMethod assignment

G2

A 100% Pur.

D 60% Pur.

F 90% Pur.

G3

B 80% Pur.

D 25% EQUI

E 50% EQUI

F 60% Pur.

G4

C 80% Pur.

D 25% EQUI

F 30% EQUI

H 80% Pur.

HEG4G3

80 8010

25

3080

25

6050

Group G2

D

F

Upwardinheritance

Methodpriorities

Displayof all CUsof a CG

Display of alloccurrences

of a CU

Method Assignment for Step Consolidation

��In consolidation groups consisting of multiple levels, the methods assigned at lower levels are used as defaults for the upper levels (upward inheritance).

��The SAP Consolidation knows if there are any lower-level consolidation units that belong to multiple subgroups (see units ’D’ and ’F’ in the example) and prompts you to make additional method assignments for these units.

��In a future release, method prioritization will handle such method ’collisions’. In the example, the purchase method would be automatically adopted for consolidation unit ’F’ in group ’G2’.

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Automatic Activities

Customizing

Sequence of Activities

Activities in the Consolidation of Investments

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A

D

B

EC

8016

40

7560

G1

G2

+20-30

Manual Data Entry:A (USD) PUR

Flex. Upload:B (USD) PURC (USD) PURD (UNI) PURE (USD) EQU

Parent Units (A, B)

First consolidationStep acquisitionPartial divestiture

Example Data

��Consolidation group G1 consists of consolidation unit ’A’ and consolidation group ’G2’.

��’G2’ consists of the consolidation units ’B’, ’C’, ’D’ and ’E’.

��’A’ is the parent unit in consolidation group ’G1’. ’B’ is the parent unit in consolidation group ’G2’.

��Consolidation unit ’A’ is fed with manual data entry, whereas the other units collect their data via the flexible upload.

��Consolidation unit ’D’ uses a foreign currency. Its local currency is UNI. All other units share the same domestic currency, USD.

��Consolidation unit ’E’ is consolidated using the equity method. The other units are consolidated using the purchase method.

��’B’ acquires another 20% ownership in ’C’ (step acquisition).

��At a later date, ’B’ divests a 30% interest in ’C’ (partial divestiture).

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Investment book value 1,000./.

Group share * Stockholders’ equity 0.80 * 1,000=

Differential 200./.

(Hidden reserves) (0.80 * HdR)=

Goodwill 200

Min. shares * Stockholders’ equity 0.2 * 1,000=

Minority interest 200

HdR: Hidden reserves

Calculation of First Consolidation

��Consolidation under the following assumptions:

• Investment book value Parent 1,000

• Investment percent Parent 80 %

• Equity Subsidiary 1,000

• Hidden reserves Subsidiary None

��Calculation

• Difference amount 1,000 - 80% * 1,000 = 200

• Group hidden reserves (Group share * hidden reserves)

• Goodwill 200 - 0 = 200

• Minority interest 20 % * 1,000 = 200

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Group Balance Sheet

(I) Investment (A) 1,000

(I) Minority interest 1 (B) 160(I) Minority interest 2, 3 (B) 40

(II) Stat. Equity 1 (B) 640(II) Stat. Equity 2 (B) 80(II) Stat. Equity 3 (B) 80

(I) Equity 1 (B) 800(I) Equity 2 (B) 100(I) Equity 3 (B) 100

(I) Goodwill (A) 200

(II) Stat. offsetting item (B) 800

First Consolidation (A -> B: 80%)

��The investments and the group share in subsidiary equity are eliminated. The minority share is transferred to minority interest. Any resulting difference is either positive or negative goodwill.

��Entry "I" shows the elimination of the investment of the parent (’A’) and the equity of the subsidiary (B). The remaining equity of the subsidiary is reclassified to minority interest. The excess investment over equity is disclosed as goodwill at the parent.

��The Goodwill item needs to be specified for automatic postings. This is normally done in the Method Definition. The item must have a breakdown category with transaction types if you want to report asset history.

��To account for any divestitures or partial divestitures at a later date, a form of subsidiary accounting is done using statistical items (see the "II" entries). The amount corresponding to the equity, which was eliminated against the investment of the parent, is posted to these items. Plus, the partner unit is set to the parent unit.

��For a simpler view of the posting proposals, there is an option to turn off the display of statistical items. The option is found in IMG, in the Global Settings, "Display statistical items".

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Group ABCDE

Unit B

First consolidation

Investment Investment holdingsholdings 1000 1000 0Parent % Subsid.%

A Unit A 100 80 1000 1000 0Equity capitalEquity capital -1000 -800 -200 2501 Common stock -1000 -800 -200GoodwillGoodwill 200

Document

Subsequent consolidationTotal Group Min.int.

Minority interestMinority interest -200 -160 -40 Document

……

Document

--

--

--

--

--

--

Total Group Min.int.

--

++

--++

++

--

Unit C++

Results of the Consolidation of Investments

++

Amortisation of goodwill--

��Consolidation of investments produces:

• a comprehensive audit trail in hierarchy form

• automatic posting documents

��The hierarchy can be expanded and compressed at will.

��Analysis criteria are:

• Consolidation Groups

• Consolidation unit

• activity (such as "first consolidation")

• FS items (such as "investment")

• Document

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Documents automatically created forDocuments automatically created for::

First consolidation

Subsequent consolidationGoodwill amortization

Step acquisition

Increase in indirect investmentReduction in indirect investmentIndirect transfer

Increase in capitalizationReduction in capitalization

Partial transferTotal transfer

Partial divestitureTotal divestiture

Method change

Unambiguous link of:• Reported investment & equity data

• Posting document

C/IC/I activity number activity number

Purchase Method

Accounting TechniquesAccounting Techniques

Proportional Cons.

Equity method

Mutual Stock Method

Automatic Consolidation Activities

��When you enter reported investment and equity data, the system automatically assigns a sequential activity number, which uniquely identifies the activity. The activity number is also recorded in the posting document.

��You do not enter the activities increase/reduction in indirect investment and indirect transfer. These are derived from other activities. Example:

��An increase in indirect investment in company D controlled by a subsidiary is achieved when the parent company A acquires more shares in subsidiary B. B holds shares in D. The step acquisition by A in B described above therefore results in a change in the indirect investment in D.

��An indirect transfer occurs in the following situation: ’A’ owns stock in ’B’ and ’C’, while ’B’ owns stock in ’D’, which in turn owns stock in ’E’ (A-B-D-E). ’B’ decides to sell ’D’ to ’C’. Since this transaction takes place within the group, the activity total transfer is entered. The indirect transfer takes place for ’E’.

��The activity number of the derived activity always coincides with the activity number of the triggering activity.

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InvestmentInvestment Activities Activities

G GroupA Parent

First cons. BStep acquis. B

B Subsidiary. . .

Equity ActivitiesEquity Activities

G GroupB Subsidiary

First cons.Subs. cons.

C Contr. by subsid.. . .

TotalTotal Activities Activities

G GroupB Subsidiary

First cons.Step acquisitionSubs. cons.GW Amortization

IncreaseIncrease//capitalizationcapitalizationActivity noActivity no. 1234. 1234

A 1033 Inv. 100 USDB 2011 Equ. 100 USD

DefaultDefault Values Values

Increase/capitalizationz 1033, + , 0%z 2011, +

Subsequent cons.z 2014, +

A 1033 Inv. 100 USDB ________ _______

Combined Data Entry Separate Data Entry

New Activity

IncreaseIncrease//capitalizationcapitalizationActivity noActivity no..

Entry of C/I Activities

��There are two ways to convey C/I activities to the system:

• Fully automatic derivation of the equity from the balance sheet of the respective units

• Manual entry of activities

��EC-CS supports several ways of viewing the activities of a period or a year:

• Changes in investments, sorted by the reporting "upper units": Depending on the activity, you either (a) only enter changes in investment data (’separate data entry’), or (b) you simultaneously enter the changes in investment data as well as the changes in equity data ( ’combined data entry’). Separate data entry involves the activities step acquisition, partial transfer, total transfer, partial divestiture, total divestiture, investment amortization/write-up. Combined data entry involves first consolidation, increase/reduction in capitalization, liquidation, horizontal/vertical business combinations. You can define default values to make the manual entries easier.

• Changes in equity, sorted by the consolidated units: Depending on the activity, you either (a) only enter changes in equity data (say, for subsequent consolidation or dividend distribution), or (b) you enter both changes in investments and equity data. (See the preceding paragraph.)

• Overall view of all activities of a consolidation unit : This also shows those activities that were only entered for other units (such as step acquisitions).

• You can use a flexible upload to transfer investment or equity change data separately per unit

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Automatic Activity Recognition

Global settings

Get equity data from

• Totals DB and additional fin. data

Reported Items for Automatic Activity Recognition

Specify Reported Items forChanges in Equity

Equity ActivitiesEquity ActivitiesGroup

SubsidiaryFirst consolidationSubsequent cons.

.....C

01 First consolidation CS50-01 CS01-600002 Subsequent cons. CS50-02 CS01-600018 Distribution of ... ...

dividends

Activity FS item / Subitem set

•• Retained Earnings Retained Earnings

•• Currency Translation Currency Translation Adjustments Adjustments

BG

��The consolidation of investments (C/I) program can access changes in equity data relevant for consolidation processing directly in the totals database.

��However, you always need to enter changes investments as additional financial data.

��You need to specify reported items to enable the system to locate the data it requires for processing consolidation of investments (C/I) activities in the totals database.

��For each activity, you specify the items and subitems used for entering the relevant data in the totals database. To simplify this procedure, you can define and then specify sets of items.

��You only need to specify reported items if you indicated in the global settings that you want data for C/I processing to be read from the totals database or the reported equity data, instead of being entered as additional financial data.

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Consolidation of investmentsposting

Consolidationof investments

method

Minorityinterest

Appropriationof retainedearnings

StatisticalEquity

Bonuspayments

Dividenddistributions

Task

Documenttype

MiscellaneousselectedFS items

Customizing Settings (Purchase Method)

To enable automatic postings, the following Customizing settings are necessary:

��Definition of a consolidation of investments method (items, calculation of acquisitions, etc.)

��Assignment of minority interest items to the equity items (HGB also requires minority interest items for the investment items)

��Assignment of appropriation of retained earnings items to the equity items (for the group and minority interest shares)

��Assignment of statistical equity items to the equity items

��Distribution of dividend items and bonus payment items

��Definition of further statistical items

��As in the other consolidation steps, you need to define one or more tasks for consolidation of investments, and assign these to the consolidation monitor. For each task you determine which accounting techniques and activities are to apply.

��Posting requires a document type with posting level 30 in group currency.

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Cap. stock Minority interest in cap. stock

Paid-in capital Min. interest in paid-in capital

Treasury stock Min. int. <equity>

...

n:1

1:1

Minority Interest

��Among the selected items, each equity item is assigned a minority interest item in the balance sheet. This can be 1:1 or n:1.

��If you want an equity aging schedule, the minority interest items require a breakdown category with transaction types.

��These settings ensure that external shares are automatically transferred to the minority interest items within the balance sheet.

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Add. paid-in capital

Appropriations

Treasury Stock

<Equity Item>

Group Minority interest

Transfer/DeductionAdd. paid-in capital

Transfer/DeductionAppropriations

Transfer/Deduction<Equity>

Transfer/DeductionMin.int. in paid-in capital

Transfers/DeductionMin.int. in <equity>

1:1

n:1

Appropriation of Retained Earnings

��Prerequisite for automatic postings to appropriation of retained earnings is the selection of the Appropriation of retained earnings flag in C/I utilization.

��An appropriations item is assigned to each equity item for the group share (depending on whether appropriations are disclosed in the balance sheet or in the income statement). This can be 1:1 or n:1 (and can be distinguished between debits and credits).

��A appropriation of retained earnings item for the minority share is assigned to each equity item. This can also be 1:1 or n:1.

��The postings depend on whether the appropriations are disclosed on the balance sheet or at the end of the income statement. You determine this in the master data for the consolidation chart of accounts.

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ARE in balance sheet

Financial data Elim.

1. Subsequent cons.

2. Partial divestiture (30%)Reserves 1,200- 360+

Trsfr to approp. 200+ 60- 300-

Min./appropriations 360-

MI Trsfrs to app. 60+

Clearing: Cons./inv. 300+

ARE in the income statement

Financial data Elim.

1. Subsequent consolidation (80%)Reserves 1,000- 200+

Trsfr to approp. 1,000 200-

MI Trsfrs to app. 200+

2. Partial divestiture (30%)Reserves 1,200- 360+

Trsfr to approp. 360-

Min./appropriations 360-

MI Trsfrs to app. 360+

Appropriation of Retained Earnings -Posting Process

��The postings for the activities subsequent consolidation (only when appropriations in income statement) and divestiture take place within the appropriation of retained earnings.

��No postings are needed for activities such as first consolidation and step acquisition.

��Subsequent consolidation:

• If retained earnings are shown in the balance sheet, the system assumes that the changes in equity were entered at the appropriations items. No special logic is required.

• If retained earnings are shown in the income statement, the balance of the equity item is used as the trigger; the minority share of the balance is transferred from the group appropriation item to the minority appropriation item. This is why it is important that in Customizing you explicitly define the balance sheet item (* entries are invalid!).

��Divestitures:

• If retained earnings are shown in the balance sheet, the divestiture process computes the change to the equity item (360 in the illustration). 360). Since equity items are involved, the system also computes the minority share that is incurred during the divestiture ( 60). The delta to the triggering equity item is also posted to this appropriation of retained earnings item (that is, 360-60=300), so that this again results in a value of 360. The offsetting entry is posted to the C/I clearing item (defined in the other selected items).

• If retained earnings are shown in the income statement, the divestiture computes the change to the equity item and posts this amount to the group/minority appropriation items.

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Add. paid-in capital Stat: Add. paid-in capital

App. ret. earnings Stat: Appropriations

Retained earnings Stat: Retained earnings

... Stat: ...

Translation diff. Stat: Translation diff.

1:1

Posting of Statistical Equity

��To be able to automatically post subsequent divestitures, simultaneous postings must be made to statistical items.

��Each stockholders’ equity item (including the translation differences) must be assigned its own statistical item for this. This must be a 1:1 assignment.

��The items require a breakdown category that corresponds to the breakdowns of (a) the respective equity item (e.g., transaction types for the equity schedule) and (b) that of the partner.

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Distribution of dividends

Bonus payments

251600 Ret. Earnings, distribution of dividends

251630 Ret. Earnings, bonus payments

Distribution of Dividends, Bonus Payments

��You define one or more items for the distribution of dividends in Customizing of selected items for C/I.

��This is an appropriation item, broken down by transaction type subitems, if you desire an equity aging schedule.

��The item is needed for the correct calculation of the minority share in annual net income and the gain/loss from partial/total divestitures. Therefore, it is essential that only dividend distributions be posted to this item.

��Make sure you do not specify the Distribution of dividends clearing item defined in the document type for the elimination of investment income. There is a correlation with the elimination of investment income.

��You also define the items for bonus payments in Customizing of selected items. These are appropriation items, which are broken down by transaction types when desired.

• Bonus payments are distributions to the management of a company and do not affect net income. As opposed to dividends, bonus payments need not be eliminated.

• The item is needed for the correct calculation of the gain/loss from partial/total divestitures. Therefore, it is essential that only bonus payments be posted to this item.

• When a partial or total divestiture occurs, all revenues/expenses less any distribution of dividends and bonus payments are summed up and proportionally/fully inverted.

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Financial dataFinancial data A A Financial dataFinancial data B B

Investment income 120 Distributions 150

(I) Inv. inc. (A) 120

(III) ANI I/S (A) 120

(III) ANI B/S (A) 120

(II) Clear distrib.(B) 120(I) Distribution (B) 120

(II) Clear distrib. (A) 120

Consolidated income statements

Group Balance Sheet

80 %

Elimination of Investment Income

��The investment income of consolidation unit A is eliminated against the distribution at consolidation unit B (see entry I ). This uses the items specified in the method for the elimination of investment income. In this example, the entry is one-sided, which means that the amount of the investment income is the determining factor. The amount of 30 represents minority interest and remains on the distribution item.

��Clearing entries (see II ) are made to ensure that the balance sheet at the consolidation unit level also balances out. You specify the item for this entry under the document type for the elimination of investment income - chart-based characteristics.

��A financial statement balancing entry is automatically posted (see entry III ).

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(II) ANI B/S (A) 120

(III) Clear distrib. (B) 120(I) Distribution (B) 120

(III) Clear distrib.(A) 120

Group Balance Sheet

After the elimination of investment income:

Remaining Capital - B: Distributions 30Clearing: Distributions 120

Financial data B

Distributions 150

Minority interest

150

Distrib., minor.(B) 30Distribution (B) 30

Group Balance Sheet 20 %

Distribution of Dividends

��After the elimination of investment income, the minority share of the distribution of dividends must be reclassified if the group share of the distributing consolidation unit is less than 100%. This is done in a separate C/I activity for dividend distributions.

��Customizing needs to know which items contain the dividend distributions to be able to reclassify the amount still remaining on the distribution of dividends item.

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Appropriation of retained earnings

Annual net income prior to first consolidation

...

Transfers to minority interest in annual net income

Deductions from minority interest in annual net income

...

Statistical items

Annual net income

Annual net income, offsetting item

Minority interest in annual net income

Minority interest in ANI, offsetting item

Adjusted annual net income

Minority interest in adjusted annual net income

Overall offsetting item

Other Selected Items (1)

��Further statistical items are required for annual net income.

• The items Annual net income, Minority share in annual net income are needed for reporting purposes.

• The item Adjusted annual net income is the annual net income less the dividends and bonus payments distributed within the consolidation group. The item is needed for computing the gain/loss from partial/total divestitures.

• The items do not require a breakdown category, and are defined preferably in the range of numbers starting with 9 (e.g., 931100 Annual net income, total; 931200 Annual net income, total - offsetting item; 931300 Annual net income, minority share; etc.).

• An overall offsetting item is defined, which has already been posted in the first consolidation example. There, the statistical equity items are offset with this item. No breakdown category is needed.

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Other Selected Items (2)

Items for Group Shares

Group share

...

Group share in annual net income

Divestiture

Item for loss

Item for gain

Item for loss - minority share

Item for gain - minority share

Clearing item for divestiture preparation

��Furthermore, you also need to specify items for group shares. These items provide information about the structure of the corporate group for reporting purposes. To display this information, you need to run the group shares report.

��For subsequent divestitures, you define gain and loss items for the group and minority shares respectively.

��The item Clearing for divestiture preparation is used in the function Preparation for changes to consolidation groups. This ensures the accurate disclosure of the balance sheet, income statement and aging schedules during first consolidations and total divestitures. The item is used for zero balances for each transaction currency.

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Automatic Entries at the Click of a Button

Equity ActivitiesEquity ActivitiesGroup

SubsidiaryFirst consolidationSubsequent cons.

.....C

Document # 3000000130

Retained Earnings Current Year 40

Minority Interest - Retained Earnings Current Year 40

Retained Earnings ......

Minority Interest ......

Total Annual Net Income 200

Total Annual Net Income - Offset 200

........ ......

........ ......

Total Group Min.int.Equity CapitalEquity Capital -200 -160 -40

B

Specify

• Specify Reported Items for Changes in Equity• Minority Interest Items• Selected Items for Posting• Miscellaneous Selected Items (incl. statistical items)

G

��This example summarizes some of the necessary configuration steps for automatic posting:

1. specifying reported items to enable the system to locate the data required 2. specifying selected items for automatic postings during the run of Consolidation of Investment program.

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Subsequent Consolidation

Group balance sheet/income statement

(I) Minority share ANI (B) 40

(II) ANI, I/S (B) 40

(III) ANI, total (B) 200

(III) ANI, minority share (B) 40

(IV) Adjusted ANI (B) 200

(IV) Min. in adjusted ANI (B) 40

(I) Annual net income (B) 40

(II) Minority share, I/S (B) 40

(III) ANI total, offset (B) 200

(III) ANI min., offset (B) 40

(IV) Overall offset (B) 240

(B: Annual net income of 200, group share of 80 %)

��Assume that the current year saw a profit of 200.

��Subsequent consolidation reclassifies the minority interest as per the external share of 40 monetary units. In the balance sheet, the minority interest is transferred to the minority interest item (see I).

��The minority shares are also adjusted in the income statement (see II). The item for transfers to minority share in annual net income in the income statement is defined in Customizing under Other selected items.

��The statistical items for annual net income are updated separately for the total annual net income, the adjusted annual net income, and the minority share (see III). These items are also defined in Customizing under Other selected items.

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Goodwill Amortization

Group balance sheet/income statement

(I) Amortization, I/S (A) 40

(I) ANI, B/S (A) 40

(II) ANI, statistical (A) 40

(III) Adjusted ANI (A) 40

(Goodwill from first consolidation = 200, life of goodwill = 5 years)

(I) Goodwill (A) 40

(I) ANI, I/S (A) 40

(II) ANI, statistical offset (A) 40

(III) Overal offsetting item (A) 40

��The automatic posting of goodwill amortization requires the following settings:

• In global settings or method definition, you define a goodwill item (acquisition and accumulated amortization), an amortization expense item, and the amortization characteristics (life in years).

• The financial statement imbalance is automatically calculated and posted in the balance sheet and income statement to the items that are defined in IMG under Financial statement items - Selected items for posting.

• The subsidiary entry to statistical items is also automatic, and uses the same items as in subsequent consolidation. These items need to be posted to accommodate future total/partial divestitures.

��The amortization entry occurs at the parent (A).

��Minority interest entries in the balance sheet, income statement, and statistical items are posted exactly when the C/I method uses direct shares and the parent’s group share is less than 100%.

��Note: The training system is set up for quarterly consolidations. This is why the annual amortization of 40 USD is divided into 10 USD per quarter.

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Step Acquisition

Group Balance Sheet

(I) Investment (B) 240

(II) Stat: Common stock (C) 200

(II) Stat: ANI prior years (C) 40

(I) Min./Common stock (C) 200

(I) Min./ANI prior years (C) 40

(II) Stat: Overall offset (C) 240

(B in C +20%, 240 units; Equity of C: Common stock 1000, RE prior yrs 200)

��This example assumes that ’B’ acquires an additional 20% of common stock of ’C’ for 240 monetary units. The equity at ’B’ is comprised of common stock of 1,000 units and prior year retained earnings of 200 units.

��The investment is cleared and the minority share is adjusted by 20%. In this case no goodwill is incurred by the parent company ’B’.

��In the area of statistical items, the equity items are adjusted by the amount that is eliminated against the parent’s investment. This is posted at ’C’ subsidiary, showing parent ’B’ as the partner unit. The offset is posted to the overall statistical offsetting item (see maintenance of other selected items).

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Sequence of Activities (Default Sequence)

Activities of the Period (example):

(01) First consolidation A Æ B 80 %(07) Step acquisition A Æ B 10 %(02) Subsequent consolidation B(11) Total divestiture B(01) First consolidation A Æ C 60 %(01) First consolidation B Æ C 15 %(02) Subsequent consolidation C(11) Total divestiture C(01) First consolidation B Æ D 55 %(02) Subsequent consolidation D(11) Total divestiture D(10) Partial divestiture B Æ D 45 %

Default Sequence:

(1) First consolidation(3) Subsequent consol.(2) Step acquisition(5) Partial divestiture(4) Total divestiture

InvestmentStructure

A

B

C D

��This example is intended to illustrate the functionality of activity sequencing. The sequence numbers of the activities correspond to those in the SAP system.

��The data of the example is entered as activities in the above sequence. This leads to an investment structure with an implicit sequence of consolidation units (A->B->C->D).

��At this point, you can define a default sequence of activities in Customizing, based on one consolidation unit. The additional flag (up to here) controls the meshing of the activities of different consolidation units: In the first run, all of the activities up to the flagged activity (step acquisition in this example) are processed; then the activities of the next consolidation unit are processed. Afterwards, the remaining activities (partial divestiture, total divestiture in this example) of the first consolidation unit are processed.

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Sequence of Activities (Auto Sequence)

Activities of the Period Activities per CU Overall Sequence

(01) First consolidation (B) B: 01 B: 01(07) Step acquisition (B) B: 02 B: 02(02) Subsequent consolidation (B) B: 07 B: 07(11) Total divestiture (B) B: 11 C: 01(01) First consolidation (C) C: 01 C: 01(01) First consolidation (C) C: 01 C: 02(02) Subsequent consolidation (C) C: 02 D: 01(11) Total divestiture (C) C: 11 D: 02(01) First consolidation (D) D: 01 D: 10(02) Subsequent consolidation (D) D: 02 D: 11(11) Total divestiture (D) D: 10 C: 11(10) Partial divestiture (D) D: 11 B: 11

InvestmentStructure

A

B

C D

CU: Consolidation unit

��The left column lists the original sequence of all activities of the period, which is determined by data entry. Together with the activities from all the prior perods (none in this example) this shows the changes in investments and forms the investment structure.

��The sequence of the second column is determined by the definition of a default sequence in Customizing. The sequence is determined for each consolidation unit. In this example, the activity subsequent consolidation (02) is placed in front of step acquisition (07), and partial divestiture (10) in front of total divestiture (11).

��The overall sequence is the result of the mixing of the investment structure (left column) with the sequence per consolidation unit (center column).

��Each of hierarchy levels are processed from top to bottom.

• In each hierarchy level, each of the consolidation units are processed in alphabetic sequence. For each unit all of the activities are processed up to (and including) the Up to here threshold.

• Then all of the activities following the Up to here threshold are added, the sequence of the consolidation units being reversed.

• The creation of a manual sequence is also possible:

- By moving or deleting the Up to here threshold among the activities of each consolidation unit (afterwards automatic sequence as described)

- By manipulating the automatically derived global sequence using the select & move functions for activities (this is done under Global sequence)

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Activity Interpretation in a Consolidation Group

A

D

B C

A

D

B C

A

D

B C

A

D

B C

A

D

B C3030

3535 25256060 6060 6060

Investment

First cons.

___

___

Stepacquisition

First cons.

___

Transfer

Partialdivestiture

First cons.

Transfer

Totaldivestiture

Stepacquisition

Partialdivestiture

___

Totaldivestiture

G1 = ABCD

G2 = BD

G3 = CD

A + 30%external

B +60%external

B -25%C +25%

B -35%C +35%

C -60%external

Activity

CG

30 30 30 30

��The activities reported to the overall consolidation group - from its point of view - need to be re-interpreted for each sub-group.

��However, different C/I methods may be applied - even if the same activities are interpreted.

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Consistent Consolidation Logic

A

C+75

Investment

First consSubs. cons

Step acq.Subs. cons

Ind. invest.Subs. cons

Partial div.Subs. cons

Subs. consTotal divest.

Activities

B80

A

C+15

B80

A

C

+10

B

A

C- 30

B

A

C- 60

B75

80

90

90

90

90

60

Goodwill

Asset history

Minority interest

Equity aging

Gain/loss fromdivestiture ofinvestment

��Characteristics of consolidation of investments are:

• High complexity of individual activities (method changes, divestitures, transfers, and so on)

• Strong interrelation between all activities; the semantics of individual activities cannot be viewed and implemented as a stand alone activity

��SAP delivers a consistent consolidation logic across all activities.

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Report Painter: Stockholders’ Equity Analysis

Investment

Goodwill APCVA

Equity, first consStock capitalAppropriations

Equity, subs.consAppropriationsRetained earnings

Minority InterestStock capitalAppropriationsRetainedearningsTotal Equity

1000

Begin(60%)

Acquisition(+20%)

Subs. cons.(80%)

Divestiture(-30%)

End(50%)

400 0 -525 875

400-100

160-140

-21090

350-150

600600

24020040

-315-300-15

52550025

120120

160

160

-105-45-60

17575

100

48040080

-240-200-40

4203006060

700500100100

1200 0 200 0 1400

40

40

��Example of a user-defined analysis of the "usage" of stockholders’ equity:

• Elimination during activities similar to first consolidation

• Remaining group equity from subsequent consolidation

• Equity transferred to minority interest

��The comparison between the investment and the eliminated equity explains the acquisition value of goodwill.

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Comparison Between HGB and US GAAP/IAS

z First consolidation

z Subsequent consolidation

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First Consolidation - HGB vs. US GAAP/IAS

A

InvestmentInvestment

80%

B

C

80%

60%

75%

Inv 100

Equ 100-

GroupGroup BC BCUS GAAPUS GAAP HGBHGB

25 25

GroupGroup ABC ABCUS GAAPUS GAAP HGBHGB

25 20

25- 25- 25- 20-

80%

GW

Min

GW

Min

US GAAP: Direct shares: 100 - 100 x 75%HGB: Group shares: 100 x 80% - 100 x 60%

Apportionment using group share of the upper unit (80%)

��EC-CS supports the consolidation of investments according to German HGB as well as US GAAP / IAS.

��Both methods can be used simultaneously.

��The methods are selected in the definition of the consolidation of investments method.

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Subseq. Consolidation - HGB vs. US GAAP/IAS

A

InvestmentInvestment

80%

B

C

80%

60%

75%

GW 25/20(5 years)

ANI 20-

Group BCGroup BCUS GAAPUS GAAP HGBHGB

5- 5-

Group ABCGroup ABCUS GAAPUS GAAP HGBHGB

5- 4-

5 5 4 4

80%

GW

ANI

GW

ANI

US GAAP: Minority share on amortization of goodwill in group ABCTotal ANI is smaller (as opposed to HGB)Group ANI is the same

1Min

5 5 8 8

5- 5- 8- 8-

ANI

Min

ANI

Min

��The differences between HGB and US GAAP/IAS in first consolidation in a multiple-level group with minority interests reappear during subsequent consolidation (and all other, more complex activities).

��After goodwill is completely amortized, the minority interest in the group becomes the same for both HGB and US GAAP / IAS.

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Equity Method

z First consolidation

z Amortization

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Equity Method

holdings adjustments

Changes in investee equity

Equity

one-line consolidation

two-line consolidation

Changes in investments

Investment

Differential

Investment item

sep. goodwill item

Data entry Automatic Calculation Customizing

��For the equity method

• You supply the parent’s investment (changes in investments) and the subsidiary’s equity (additional financial data or totals database).

• For the subsequent consolidation you supply the equity holdings adjustments, either using the equity holdings adjustment data as part of the additional financial data or via the changes in equity data. In the last case no other data must be supplied. The only data still needed are the reported items, which are taken from the reported equity data.

• The system automatically calculates the differential (excess investment over equity or vice versa).

��In Method Definition of Customizing you specify how the differential is disclosed:

• One-line consolidation (book value method)

- Goodwill is not separately disclosed. It is instead a part of the investment book value (equity in earnings of affiliates). The investment and goodwill are one and the same item.

- However, according the German HGB, goodwill must be separately disclosed in the notes to financial statements. To do this, you can create a separate subitem (e.g., 135 Additions to goodwill, equity method) and specify the subitem in the method for the Acquisitions goodwill item.

• Two-line consolidation (proportion of equity method)

- Goodwill is disclosed separately (as in the purchase method): Create an item for the investment book value and another item for goodwill.

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First Consolidation for Unit E (Equity Method)

BB

EE

40 %

Investment 500

Equity 1000

Group Balance Sheet

(I) Investment (B) 100

(I) Goodwill, equity (B) 100

��Parent ’B’ holds an investment of 500 units in affiliate ’E’ and reports this in its balance sheet.

��Affiliate ’E’ shows common stock of 1,000 units. However, its financial data is not included in the group’s aggregated balance sheet.

��Since the group share in ’E’ is 40%, the system computes a minority share of 600 units in common stock of ’E’. The settlement between the investment and equity results in a differential of 100 units (500 - 400 = 100).

��The system generates an entry, which proportionately adjusts the investment of parent ’B’ by 100 units, and reports the excess amount as goodwill (in this case using the two-line method).

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Amortization of Goodwill (Equity Method)

BB

EE

40 %

Excess amount:100

Amortizable life: 5 years

Group balance sheet/income statement (B)

(I) GW amort., I/S 20

(II) ANI, B/S 20

(III) ANI, stat. 20

(IV) Adjusted ANI 20

(I) Goodwill 20

(II) ANI, I/S 20

(III) ANI, stat. offset 20

(IV) Overall offset 20

��The amortization of goodwill (100 units over 5 years = 20 units) is posted at parent ’B’.

��In this example, the amortized amount is credited directly to the goodwill item. The offsetting entry is charged to amortization expense (see entry I).

��Because the activity affects net income, the annual net income items in both the balance sheet and the income statement are automatically adjusted (see entry II).

��As in amortization using the purchase method, the adjustment to annual net income is posted to the statistical items (see entry III).

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Customizing Settings (Equity Method, Subseq.Cons)

1 Annual net income2 Dividends3 Bonus to management4 Translation differences5 GW clearing in cons group6 Adj. of prior prd earnings

Scope of Financial DataP

ostin

g ite

ms

for

Equ

ity M

etho

d

Reported item

s for equityholdings adjustm

ents

Adjustment of Investment Share

��Subsequent consolidation in the equity method, in essence, adjusts the parent’s investment share by the values that are collected in the reported data.

��Therefore, at first you define the scope of reported data for the equity method postings.

��Then, you specify the posting items for each scope. For each scope you also specify the following items:

• Offsetting item

• Negative investment book value

• Statistical equity

In some cases, these items must be enhanced in the consolidation chart of accounts. The latter two items have different characteristics for different scopes of reported data.

��For each scope you also define reported items if the equity holdings adjustment data is collected from the reported equity data. The collection can only be automatic if the items defined for each scope are unambiguous.

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Accounting Techniques - Comparison

Cash 100ANI Group 50 -MI 50 -

Sales 300-Earnings of affil.Expense 200* ANI Total 100 -Transfer MI 50Transfer B/Sheet 50

Cash 50ANI Group 50 -MI

Sales 150-Earnings of affil.Expense 100* ANI Total 50 -Transfer MITransfer B/Sheet 50

Investment 50ANI Group 50 -MI

SalesEarnings of affil. 50 -Expense* ANI Total 50 -Transfer MITransfer B/Sheet 50

Purchase MethodPurchase Method ProportionalProportional Cons Cons.. Equity MethodEquity Method

Cash 100ANI 100-

Sales 300-Expense 200Transfer B/Sheet 100

Financial dataFinancial data B B

Consolidated FS(subsequent consolidation)

A

B

50 %

��Subsequent consolidation in the equity method, in essence, adjusts the parent’s investment share by the values that are collected in the reported data.

��Therefore, at first you define the scope of reported data for the equity method postings.

��Then, you specify the posting items for each scope. For each scope you also specify the following items:

��Offsetting item

• Negative investment book value

• Statistical equity

In some cases, these items must be enhanced in the consolidation chart of accounts. The latter two items have different characteristics for different scopes of reported data.

��For each scope you also define reported items if the equity holdings adjustment data is collected from the reported equity data. The collection can only be automatic if the items defined for each scope are unambiguous.

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Reclassifications

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Reclassifications

Reclassification method

Customizing

Application

Reclassification rule

Reclassification Method

Task Document type

Execution

Audit trail

��This component provides the functionality for reclassifying the values of financial statement (FS) items. It features a flexible set of rules, which is able to accommodate a wide array of applications.

��You may need reclassifications to adjust the financial data reported by consolidation units to meet corporate requirements. You may also need to reclassify consolidated data, as well.

��In most cases, a reclassification transfers the value of one item to another item. For example, the group may deem it necessary to reclassify Finished Goods to Unfinished Goods.

��Reclassification also has the following uses:

• Reclassification of the value of one item or of an entire set of items

• Reclassification of an entire value or of a percentage of a value

• Items can be delimited to certain subitems, partner units or the sets thereof

• Reclassifications can be posted at the triggering unit or at the partner unit

• Inheritance of items and their additional account assignments

• Use of different posting levels (10, 20, 30)

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Reclassification of Sales Revenue

Example: Sale of an in-house produced machine without interunit profit or loss

Reclassification Rule:

Triggering item

Equipment

Subitem category

1

Subitem

125

Source itemCapitalized goodson own account

Destination item

Sales revenue

Capitalized goodson own account

Sales revenue

100100 100

from partner unit A

Equipment

100

Receivables

100

Payables

100

Subitem category 1

Subitem 125

Partner unit BUnit A Unit B

with

posting to partner

��In this reclassification, the order of the source item and destination item is reversed in regards to normal accounting logic. This is necessary because the debit/credit signs of the triggering item and the source item differ. The system reverses the sign of the balance of the triggering item to reclassify that balance from the source item to the destination item.

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Reclassification: Netting of Receivables / Payables

Reclassification with a positive balance

A

B

D E

F G

Payables / receivablesof C to/from D, F, G

D 100

Receivables from C Payables to C

F 200

G 50-

Triggering item set: Balance 250

Subgroup Report

Receivables: 250

C

Reported data, posting level 0

50-300

Receivables Payables

50- 50

Entry with posting level 30

Source item

��One part of consolidation is interunit elimination, which eliminates receivables and payables incurred by business transactions that take place within the boundaries of a corporate group. As in our example, however, in the overall consolidation group you might record your business partners as partner units that are not included in the consolidation group during the consolidation process. During step consolidation, when the consolidated group is passed on to the next higher level, these business partners might belong to one of the higher-level consolidation groups. Such business relationships might require that you net your receivables against the payables, from and to each trading partner thus, stating a net balance for each trading partner.

��When customizing the reclassification, in this situation you need two reclassification rules - one for (positive) debit balances and one for (negative) credit balances.

��The reclassification entry uses posting level 20. In this example, however, posting level 30 is used in order to trigger a group-dependent reclassification of those payables/receivables that do not have a partner within the subgroup concerned.

��You can specify in the reclassification rule that you want to compute the net balance per partner unit. Then the reclassification is posted at the partner unit instead of at the triggering consolidation unit. In this case, the triggering unit is used for the partner assignment. This function is only available for reclassifications at levels equal to or greater than 20.

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Reclassification of an Item, Triggered by theDebit/Credit Sign

Receivables

200 400

Payables

400200

Interunit Elimination

100

Receivables

200

Payables

100200a) b)

a) 100

OtherExpenditures

b) 200

-100

Reclassification with a negative balanceReclassification with a negative balance

100100

OtherExpenditures Other Revenue

Triggering and source item Destination item

��An alternative to the standard reclassification logic is the debit/credit sign-triggered reclassification. The reclassification is triggered by the sign of the balance of all triggering items.

��This type of reclassification reclassifies the value of the source item as opposed to the standard reclassification logic, which reclassifies the value of the triggering item (or item set). The source item is cleared to a zero balance.

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Periodic Reclassifications

Capitalized goodson own account

Sales revenue

100100 100

from partner unit A

Equipment

100

Receivables

100

Payables

100

Subitem category 1

Subitem 125

Partner unit BUnit A Unit B

Period 06

Unit A

Capitalized goodson own account

Sales revenue

100100 100

from partner unit A

Equipment

100

Receivables

100(prd 06)

Payables

100(prd 06)

Subitem category 1

Subitem 125

Partner unit B

Period 07

200(prd 07) 200

200(prd 07)

300

200(prd 07)

200 200

in 07

Unit B

Cons frequency5 (monthly)Cons frequency

5 (monthly)

��Periodic reclassification only processes the new values added in the selected range of periods. Otherwise, the year-to-date value of the current period is used.

��You use this special type of reclassification (a) if the triggering item is not the same as source item, or (b) a percentage of the value is reclassified.

��To set up periodic reclassification, in Customizing of the definition of the respective method you select the Periodic reclassification indicator and specify the desired Consolidation frequency for each applicable reclassification rule. This only includes the item values that belong to the current interval of the selected consolidation frequency.

��Reclassifications are restricted to the last period in the range of periods specified in the consolidation frequency. For example, only periods 06 and 12 are posted in semi-annual consolidation runs.

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Consolidation of Investments: Unit Summary

z Define the tasks, methods and document typesrequired to carry out interunit eliminations and theconsolidation of investments

z Determine to what extent you want to useconsolidation of investments

z Execute different types of interunit eliminations,consolidation of investments and reclassifications

You are now able to:

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Consolidated Functions Exercises

Unit: Consolidation Functions Topic: Interunit Elimination

After completing these exercises, you will be able to:

• Define a task to eliminate IU payables/receivables

• Define a task to eliminate IU investment income and insert the task in a new task group for the consolidation monitor

• Set up a document type for posting the elimination of IU payables/receivables and IU investment income

Define methods for the two eliminations

• In this part of your presentation, you demonstrate the elimination of interunit payables and receivables.

• Interunit elimination is one of the consolidation tasks that you run after you have translated local currency data and posted standardizing entries to produce a corporate valuation of data.

• You decide to run all of the elimination tasks in the consolidation monitor so that you can benefit from its visual status display.

You need a document type specifically for automatic postings made during the elimination of IU payables and receivables:

1-1 Interunit Elimination

1-1-1 Defining the document type:

Create document type 21, Elimination of IU payables/receivables:

The steering committee wants the following values in the document type:

• Postings in transaction currency and group currency

• Reversal of generated postings in the subsequent period

• Use of item 131000 (Clearing item for payables/receivables) as the clearing item for postings between consolidation units

What you enter:

Field/Data Type Value

Posting level 20 (for version 100)

Balance check 0 (Error if balance is not zero)

Business Application

1 (Elimination of IU payables and receivables)

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Define the number range:

1. Select document type 21. Double-click Number Range/Auto Reversal.

2. Enter Version 100, Number range 20 and select Auto Reversal.

3. Choose Define Number Range and specify the document number range 20, by choosing Insert Interval icon, from 2000000000 through 2999999999, effective until the current year + 1.

1-1-2 Define the method for the elimination of IU payables/receivables

What you enter:

• IU010, Elimination of A/P, A/R

• Assign sequence number 010

• Create one set for the receivables item and one set for the payable item.

• Set name:

For example, for the receivables item: X-130100 where the letter corresponds to your group number

→ Group 01: A-130100

→ Group 18: R-130100

• The steering committee decided that the elimination difference is posted to the consolidation unit that has the receivable.

Make the appropriate settings. Use exchange rate indicator 5 for the splitting of differences.

• The steering committee prescribed the following items for posting the debit and credit entries for Other Elimination Diffs and Currency-related Elimination Differences.

- Other differences:

- Debit 125300

- Credit 205700

- Currency-related differences:

- Debit 250940 Subitem: 120

- Credit 250940 Subitem: 120

• You set up the task for the elimination of IU payables and receivables:

• Define a task to eliminate IU payables/receivables

• Add this task to a new task group

• Assign the new task group to your dimension. This enables you to run the elimination in the consolidation monitor.

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1-1-3 Defining the task A/R-A/P and task group CONS:

• Defining the task A/R-A/P

- Name: A/R-A/P

• Short text Payables, Medium text IU Payables/Receivables

• Create task version 100 with the description Elim. A/P-A/R.

• Assign the following values to the task version: Method IU010 (IU payables/receivables) and Document Type 21 (effective from period 12 and current year + 1).

• Assign task version 100 to consolidation version 100.

• Include the task that you created in a new task group CONS with the description Cons Monitor (group XY) for the consolidation monitor.

• Assign task group CONS to your dimension

1-1-4 Executing the elimination

Procedure:

• In the consolidation monitor, run the elimination tasks for consolidation group G2.

Then, run the task for G1.

• In your presentation, demonstrate that the ownership of G1 in B and C is still displayed after the elimination entries have been posted and consolidation group G2 has not been locked yet.

• After presenting the elimination of IU payables and receivables, block the task for all consolidation groups.

• In this part of your presentation, you demonstrate the elimination of investment income.

Interunit elimination includes the consolidation task elimination of IU investment income.

You make the same Customizing settings as used for the previous elimination.

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2-1 Eliminating investment income

2-1-1 Define a document type as prescribed by the steering committee.

Requirements:

• Document type 23, description IU investment income

• Posting level 20

• Balance check 0

• Bus. application 3

• automatic posting is to take place in group currency (without posting of deferred income taxes or automatic reversal in the subsequent period).

• Version-based attributes:

Number range 20 (range from 2000000000 to 2999999999, effective until current year + 1!), no automatic reversal for documents with document type 23!

• Clearing item:

Item 251620 (Retained earnings - Clearing of Dividends Paid), subitem 120

2-2-2 Define method IU020 to eliminate IU investment income:

Requirements:

• Method IU020, description IU investment income

• Treatment of differences: One-sided elimination

• Set X-320400

(X = the letter that corresponds to your group number)

Set X-320400 contains item 251600 retained earnings, distribution of dividends with subitem 140 as the item for other differences

2-2-3 Defining a task:

Procedure:

• Create task DIV ELIM

Short text Inv-Income, medium text Elim. of IU investment income

• Define task version 100

Name: IU Inv-Income

• Assign document type 23 and method IU020 to the task version (with effective period 12 and current year)

• Assign the task version to the consolidation version.

• Insert task DIV ELIM in task group CONS. Specify task A/R-A/P as a preceding task.

(You already assigned task group CONS to your dimension.)

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2-2-4 Run the following in the monitor:

In the consolidation monitor, run task DIV ELIM for consolidation group G1.

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Unit: Consolidation Functions Topic: Consolidation of Investments - Methods

After completing these exercises, you will be able to:

• Define a consolidation of investments method

• Make assignments using inheritance

3-1 Defining a method:

3-1-1 Make the following settings for the utilization of the consolidation of investments:

• Goodwill/negative goodwill is amortized by specific methods

• Appropriations of retained earnings are posted automatically

Under global settings determine that:

• “standardized financial data” is used as the calculation base

• The document types are assigned through tasks

3-1-2 Define a consolidation of investments method called PURCH for the accounting technique purchase method using the following properties:

• Minority interest is calculated using direct shares (US GAAP). • Positive and negative goodwill is amortized over 5 years;

no threshold value is used; amortization begins at the beginning of each period (Enter: 2)

• Item for positive goodwill (APC/VA item) 181100 Choose the appropriate subitems (120, 220, 275).

• Item for amortization and write-ups: 311810 Choose the functional area administration (0003).

• Statistical item for the amortization of positive goodwill: 933100 Make the same entries for the amortization of negative goodwill with exception of statis. item negative which is goodwill 933200.

3-1-3 Assigning the method:

Go to Hierarchy Maintenance and assign the method PURCH to all consolidation units using the inheritance technique.

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Unit: Consolidation Functions Topic: Consolidation of Investments -

Activities in the Consolidation of Investments

After completing these exercises, you will be able to:

• Examine activities

• Make Customizing settings

• Post and analyze entries

• In the unit Data Collection you already entered additional financial data to accommodate various activities.

4-1 First/Subsequent Consolidation

4-1-1 Examining the additional financial data

Examine the additional financial data for the activity first consolidation.

4-1-2 Defining a task:

• Define a task called C/I, which will be used for all activities and all accounting techniques.

• In the consolidation monitor, assign the task to task group CONS.

As the preceding task to task C/I specify DIV ELIM, Elim. of IU investment income.

4-1-3 Defining the document type:

• Define document type 51 with posting level 30 for the consolidation of investments.

• Which properties should the document type have?

• Create number 30 (effective until current year + 1) and assign the number range.

4-1-4 Assignment of document types:

Go to the C/I global settings and find out to what the document types are assigned to. Then assign them accordingly.

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4-1-5 Assigning minority interest items to the equity items:

The minority interest items are preassigned to most of the equity items.

Find out which equity items are missing and assign minority interest items to these equity items.

Field/Data Type Value

250100 Common Stock 240100 MI-Common Stock

4-1-6 Assigning statistical equity items:

As part of the preparation for postings of subsequent partial or total divestitures, statistical equity items need to be assigned to all equity items.

Do this for the same Common stock FS item that was added in the previous exercise.

Field/Data Type Value

250100 Common Stock 950100 Stat: Common Stock

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4-1-7 Define the miscellaneous selected items for C/I:

Field/Data Type Value

Annual net income prior to first consolidation

Clearing: consolidation of investments

Subitems

Clearing, debits: Equity - divestitures Clearing, credits: Acquisitions, equity

Transfers to minority interest in annual net income

Deductions from minority interest in annual net income

Annual net income

Annual net income, offsetting item

Minority interest in annual net income

Minority interest in ANI, offsetting item

Adjusted annual net income

Minority interest in adjusted annual net income

Overall offsetting item

251300

251700

140 120

370100

370100

931100

931200

931300

931400

931500

931600

939000

Do not specify any items for posting group shares, divestitures, or negative investment book values.

4-1-8 Activating the display of statistical items:

Check and make sure that the display of statistical items in documents is activated in the global system settings.

• In the global settings, you specified that the equity data is partially taken from the additional financial data and partially from the totals database. The additional financial data has already been maintained.

• Reading the data from the totals database has the advantage of always accessing current values.

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4-1-9 Executing the consolidation of investments:

In order to do this, you need to specify which items are to be read from the totals database.

You will find these transactions in the following section of the Implementation Guide:

Consolidation Functions - Automatic Posting – Consolidation of Investments – Activities – Reported Items for Automatic Activity Recognition – Specify Reported Items for Equity.

You want to read values from the database for the following activities:

• First consolidation: the item for carrying forward balances (all transaction types)

• Subsequent consolidation: annual net income and currency translation differences (all transaction types)

• Distribution of dividends: the distribution item (all transaction types)

Specify the set name, keeping the consolidation chart of accounts and activity number in mind!

Field/Data Type Value Activity 01, First Consolidation Set FS item Subitem set Subitems (transaction types)

e.g.: CSxy-zz (xy=chart of accounts, zz=activity number) 251100 CS01-6000 100 through 150 (for subitem category 6)

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Field/Data Type Value Activity 02, Subsequent Consolidation Set Retained Earnings item Currency translation differences item

Activity 18, Distribution of Dividends Set FS item

CSxy-02 251200 250900 to 250990 CSxy-02 251600 Ret. Earnings, distribution of dividends

You can use the same subitem (transaction type) set for all activities.

Start task C/I for consolidation group G2 in test mode and analyze the activities:

• What is the amount of the differential from the first consolidation of consolidation unit C?

• What amount is posted to C at item 950100 “Statistical Common Stock”?

• What is the amount of the amortization of the goodwill of B in C?

• What amounts are posted during the subsequent consolidation of C to the statistical items “Annual net income - total” and “Annual net income - minority interest”?

Start task C/I for consolidation group G1 in test mode and analyze the activities:

• What is the amount of the differential from the first consolidation of consolidation unit C? Compare this with the result for consolidation group G2. Why is no document posted with parent B?

• How does the amortization of the goodwill of B in C within group G1 differ from that in group G2?

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Unit: Consolidation Functions Topic: Consolidation of Investments – Equity Method

• The steering committee just decided that consolidation unit E is no longer to be consolidated using the purchase method. From now on the equity method is to be used.

5-1 Define the method EQUIT for the equity method (with two-line consolidation) with the following properties:

• Additions are calculated using the direct share (in compliance with US GAAP)

• Amortization of goodwill (positive and negative), life = 5 years, no threshold value, amortization starts at the beginning of the current range of periods

• Item for positive/negative goodwill: 181300 Choose the appropriate subitems for additions, amortizations and write-ups.

• Item for amortization and write-ups: 311830 Specify the functional area “ administration” .

• Statistical item for the amortization of positive goodwill: 933100

5-2 Assign the method to consolidation unit E in the consolidation group G2.

5-3 Scope of reported data:

Check the settings for the scope of reported data for the equity method, but do not make any changes.

The parent unit’s investment book value is to be updated by disclosures of:

• the annual net income

• distributions of dividends on behalf of the “ equity company”

Make a note of the scopes of reported data.

5-4 Maintaining reported equity items:

Define the reported equity items for equity holdings adjustments as follows:

• Reported annual net income 251200 120

• Reported distributions of dividends 251600 140

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5-5 Executing the task for G2:

• Before executing the consolidation of investments, go to the global settings and specify/review that the data for subsequent consolidations with the equity method is to be read from the reported equity data for equity.

• Then execute task C/I for consolidation group G2.

• What is the amount of the differential from the first consolidation of unit E?

• What is the amount of the amortization of the differential (excess) of B in E?

5-6 Executing the task for G1:

Block the task for G2 and execute the same task for G1.

Afterwards, block the task for G1, too.

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Unit: Consolidation Functions Topic: Validation III

After completing these exercises, you will be able to:

• Define financial data types

• Make the Customizing settings required to run the task from the monitor

6-1 Assignment:

In order to check the consolidated data, you use the same validation VXY (where XY = 50 + your group number) that you created in Data Collection, topic Validation I.

You now assign the validation to cons groups G1 and G2, for period categories 2 and 3.

6-2 Task:

For this validation, define the task CONS VAL and assign it to the existing task group CONS.

The translation should be run as the last task and be automatically locked after it has run without errors.

6-3 Execution:

Run the validation for cons group G1 in the consolidation monitor.

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Consolidated Functions Solutions

Unit: Consolidated Functions

Topic: Interunit Elimination

1-1 Interunit Elimination

1-1-1 Define document type 21:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Interunit Elimination o Define document types

Choose New Entries

Field/Data Type Value

Document type

Description

Attributes frame

Posting level

Balance check

Bus. Application

21

Elim of IU payables and receivables

20

0

1 (Elimination A/P-A/R)

Select:

Currencies frame:

• Post in transaction currency

• Post in group currency

Deferred income taxes frame:

• Credit deferred tax

• Debit deferred tax

1. Select document type 21. Double-click Number Range/Auto Reversal folder.

2. Choose New entries and enter version 100 and the number range. Choose Auto Reversal.

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3. Choose Define Number Range and specify the document number range 20, by choosing Insert Interval icon, from 2000000000 through 2999999999, effective until the current year + 1. Save.

4. To enter the clearing item, double-click Selected FS items folder, and choose New Entries. Go to the Clearing items tab, enter the item 131000 in the Value field and save your entry.

1-1-2 Create the method Elimination of payables/receivables:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Interunit Elimination o Define methods

Choose New entries and enter IU010 as the name of your method, and Elimination IU pay./rec. as the description.

Save your entry, select it, and double-click the FS item sets folder.

Choose New entries and make the following settings:

Note: Define the sets in the same way as you did for currency translation. Enter FS item value in Set maintenance and NOT in the Value field on the first method screen.

Field/Data Type Value Sequence number Set 1: X-130100 (X = the letter that corresponds to your group number) Radiobutton Difference: Set 1 Set 2: X-210100 Other differences: Debit: Other differences: Credit: Currency-related differences, debit, subitem Currency-related differences, credit, subitem

010 From 130100 (Input in Set Maintenance, NOT the value field!) Receivables From 210100 125300 205700 250940 120 250940 120

Save your entries.

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Select the entry that you just created and go to Further control options folder.

Field/Data Type Value

Difference strategy

Exchange rate indicator

Split Differences

1

5

Check box

Save the entries. Answer Yes to checking the Interunit elimination method.

1-1-3 Defining task Elimination of IU payables/receivables and the task group:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Postingo Interunit Elimination o Define tasks for Interunit elimination

Choose New entries.

Field/Data Type Value

Task

Short text

Medium text

A/P-A/R

Pay./rec.

Elimination of IU payables and receivables

Save your entries.

Select the entry and double-click Maintain task version folder.

Choose New entries.

Field/Data Type Value

Task version

Description

100

Elimination of IU payables and receivables

Save your entries.

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Select the entry and double-click Assign method and document type folder.

Make a new entry with the following settings.

Field/Data Type Value

Task version

FY eff.

Period eff.

Method

Document type

100

current year

12

IU010

21

Save your entries.

Select the new entry and double-click Assign task version to cons version folder

Enter the following:

Field/Data Type Value

Version

Task version

100 (actual version)

100 (Elimination A/P-A/R)

Save your entries.

Now perform the following steps:

• Define a new task group

• Assign the task to the task group

• Assign the task group to the dimension

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitor o Define Task Group

Make a new entry with the following settings.

• Task group: CONS

• Description: Cons Monitor

Save your entry, select it, and double-click Assign tasks to task group folder.

Create a new entry with the following values:

Task: A/P-A/R, (short text: Elim A/P-A/R) and save your entries.

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In Customizing, assign task group CONS to your dimension:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitor o Assign Task Group to Dimension

In the existing entry, enter the task group CONS in the field Cons mon. task group.

Save your entries.

1-1-4 Execution:

Menu Path: Accounting o Enterprise Controlling o Consolidation o Consolidation o Monitor Execute the task in the consolidation monitor. Place your cursor on the cross-section between consolidation group G2 and the IU elimination task, and choose Test run.

Next run the task, choosing Update run for cons group G1. Lock A/P-A/R task.

2-1 Elimination of Investment Income

2-1-1 Defining the document type:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Interunit Elimination o Define document types

You go directly to the detail screen for document type 21 (elimination of IU payables and receivables) that you already defined. Choose New entries.

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What you enter:

Field/Data Type Value

Document type

Posting level

Balance check

Bus. Application

Post in Group Currency

23 (elimination of IU investment income)

20

0

3

check box

Double-click Number Ranges/Auto Reversal folder. Choose New Entries.

Enter version 100 and number range 20. Save.

Select the entry for version 100.

Double-click Selected FS items folder, and choose New Entries.

Go to Clear. Items tab and make the following entries:

• Value: 251620

• Subitem: 120

Save your entries.

2-1-2 Defining a method:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Postingo Interunit Elimination o Define methods

Choose New entries and make the following settings:

• Method: IU020

• Description: Elimination investment income

Save your entry, select it, and double-click the FS item sets folder.

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Make a new entry with the following settings:

Field/Data Type Value

Sequence number

Set 1: X-320400

Save set. Other Differences

Debit subitem

Credit subitem

010

320400

251600 140

251600 140

Note: Define the sets in the same way as you did for currency translation. Enter FS item value in Set maintenance and NOT in the Value field on the first method screen.

Save your entries, choose Back, select the entry, and double-click the Further control options folder.

• Difference strategy 1

• One-sided Interunit Elimination: select the indicator

Finally, save your entries.

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2-1-3 Defining a task:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Interunit Elimination o Define tasks for Interunit elimination

Make the following settings:

Field/Data Type Value

In the task overview screen:

New Entries:

Task

Short text

Medium text

Save and select this entry.

Detail screen folders: (double-click)

Maintain task version:

Choose New Entry

Task version

Description

Save and select this entry.

Double-click:

Assign method/document type:

New Entry

Task version

Fiscal year effective:

Period effective

Method

Document type

Save and select this entry:

DIV ELIM

Inv.income

Elimination investment income

100

Investment income

100

current year

12

IU020

23

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Field/Data Type Value

Double-click:

Assign task version to cons version:

New Entry

Version

Task version

100

100

Save your entries.

Assign the new task to task group CONS.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitor o Define Task Group

Select task group CONS, go to the Assign tasks to task group folder, double-click and make the following New entry:

• Task: DIV ELIM

• Short Text: Inv. Income

Save this new entry.

Select this task, and double-click Specify preceding tasks folder. Choose

New Entries and enter task A/P-A/R. Save.

2-1-4 Run the following in the monitor:

Menu Path: Accounting o Enterprise Controlling o Consolidation o Consolidation o Monitor You run your task in the consolidation monitor by putting your cursor on the cross-section between consolidation group G1 and the elimination of investment income task.

Choose Update run.

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Unit: Consolidation Functions Topic: Consolidation of Investments - Methods

3-1 Defining a method:

3-1-1 Completing the Utilization of Consolidation of Investments

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Determine system utilization for C/I

Specify the accounting techniques purchase method and equity method. Under Global Settings, select Appropriation of retained earnings.

Specify that the settings concerning the amortization of goodwill and negative goodwill are dependent on the method used; do this by selecting the appropriate indicator in the per method column for both amortization of goodwill and negative goodwill.

Save your entries.

Edit the following global settings: Save your entries when finished.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Make Global Settings

In the Calculation base section choose standardized financial data. Under Document types assigned to select the option tasks.

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3-1-2 Defining a consolidation of investments method:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Postingo Consolidation of investments o Methods o Define methods

Select New entries and create the new method PURCH.

• Accounting technique: Purchase Method

• Additions: calculate using “ direct shares”

The treatment of goodwill already displays the option Amortization (for positive and negative goodwill), as specified in C/I utilization.

Field/Data Type Value

Accounting technique

Calculate Acquitions using:

Press Enter.

Amortization of goodwill and

negative goodwill sections:

Amortizable life, number of years

Begin amortization

Purchase Method

calculate using “direct shares”

5

2

Do not select Threshold value.

Note that you can maintain additional amortization data only after pressing Enter.

Save your entries.

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To enter the chart of accounts-based settings for the method, choose FS items to the right of the method description. Select New Entries. Enter the following FS items for BOTH the Amortization of goodwill and Amortization of Negative goodwill.

Field/Data Type Value

Acquisition Item

Subitem

Accumulated amortization item

Subitem, amortization

Subitem, write-ups

Amortization Exp. item

Subitem (Functional area)

Writeup Item

Subitem (Functional area)

Stat. item pos. goodwill

Stat. item neg. goodwill

181100 120

181100

220

275

311810

0003 (Management)

311810

0003 (Management)

933100

933200

Save your entries.

3-1-3 Assigning the method:

Assign consolidation method PURCH to your consolidation units:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Methods o Assign methods to the consolidation units o Edit method hierarchies o Choose

• Expand your hierarchy, select consolidation group G1, and choose Change.

• In the detail screen, assign method PURCH to consolidation group G1.

• Choose Downward inheritance. Save your entries.

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Unit: Consolidation Functions Topic: Consolidation of Investments -

Activities in the Consolidation of Investments

4-1 Activities in the Consolidation of Investments

4-1-1 Check the financial data for your consolidation group:

Menu Path: Accounting o Enterprise Controlling o Consolidation o Data Collection o Additional financial data o Display

Call up the changes in investments and equity, and display them by activity.

4-1-2 Defining task C/I Consolidation of Investments:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Define tasks

Choose New Entries. Define task C/I and texts. Save.

Select task C/I and double-click the detail folder Assign activities and Accounting technique. Select New Entries.

Specify 00 for “ all activities” , and 0 for “ all accounting techniques” . Save.

Again, go to the consolidation monitor and assign the task C/I to task group CONS.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitor o Define task group Select CONS and double-click Assign tasks to task group folder. Select New Entries and choose C/I and Save.

Select task C/I and double-click the detail folder Specify preceding tasks. Select New Entries.

Specify task DIV ELIM (Dividend Elimination) as the preceding task.

Save.

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4-1-3 Defining the document type:

Create document type 51 for the consolidation of investments.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Document Types o Define Document Types

Choose New Entries and Enter document type 51 with text.

Field/Data Type Value

Posting level

Balance check

Use

Manual posting

Post in group currency

Deferred income taxes

Double-click Number ranges/Auto Reversal folder on left and New Entries.

Choose Define number range then Insert Interval:

Number range

Effective Numbers from/to

Save and go back.

Version

Number range

Automatic reversal

30 (consolidation entry)

0 (error if balance not = 0)

6 (consolidation of investments)

do not select

Select

No calculation

30

current year + 1 3000000000 - 3999999999

100

30

do not select

Save.

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4-1-4 Assignment of document types:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Make Global Settings

Here you see that the document types are assigned to the tasks.

Assign document type 51 for period 012 of the current year.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Document Types o Assign Document Types to Tasks

Choose New Entries. Task: C/I, FY Effect. current year, Per. 12, Doc type 51. Save.

4-1-5 Assigning minority interest items to the equity items:

Check the current status of the assignments (18 items are already assigned):

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Selected Items o Specify minority interest items

The Common Stock FS item and 2 investment items have not been assigned a corresponding minority interest item. Choose New entries and make the following assignments:

Field/Data Type Value

250100 Common Stock 240100 MI-Common Stock

Save.

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4-1-6 Assigning the statistical items:

The Common Stock FS item has not been assigned a corresponding minority interest item. Choose New entries and make the following assignments:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Selected Items o Specify Equity items and Items for Statistical Equity postings

Select New Entries.

Field/Data Type Value

250100 Common Stock

950100 Stat: Common Stock

Save.

4-1-7 Define the miscellaneous selected items for C/I:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Selected Items o Specify selected miscellaneous items

Review the selected items and ensure that they are the same as listed in Exercises section: 4-1-7.

4-1-8 Activating the display of statistical items:

Ensure that Display statistical items is selected (Consolidation of investments section).

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Check Global System Settings

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4-1-9 Executing the consolidation of investments:

Create the reported equity items:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Activities o Reported Items for Automatic Activity Recognition o Specify reported items for changes in equity

Select New Entries.

Field/Data Type Value Activity 01, First Consolidation Set Go to Set maintenance Item Save set maintenance. Subitem set (set already defined) Subitems (Transaction types) Activity 02, Subsequent Consolidation Set Go to Set maintenance Retained Earnings item Currency translation differences item Save Set maintenance. Subitem set Activity 18, Distribution of Dividends Set Go to Set maintenance FS item Save set maintenance. Subitem set

e.g.: CSxy-zz (xy=chart of accounts, zz=activity number) 251100 CS01-6000 100 through 150 (for subitem category 6) Csxy-02 251200 250900 to 250990 CS01-6000 Csxy-18 251600 Ret. Earnings, distribution of dividends CS01-6000

Save.

You can use the same subitem (transaction type) set for all activities.

Go to the consolidation monitor and execute the equity task for consolidation group G2.

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Menu Path: Accounting o Enterprise Controlling o Consolidation o Consolidation o Monitor

Place cursor at intersection of Task C/I and G2. Select Test run.

The amount of the differential from the first consolidation of consolidation unit C is 400.

Item 950100 Stat: Common Stock is 600.

The amortization of the goodwill of B in C equals 20.

This is calculated as follows:

The differential of 400 from the first consolidation is amortized over 5 years at the amount of 80 per year. The consolidation frequency is quarterly; thus, the amount of 20 is amortized.

The amount of 200 is posted to item 931100 Annual net income - total; 80 is posted to item 931300 Annual net income - minority share.

Now place cursor at intersection of Task C/I and G1. Select Test run.

The amount of the differential from the first consolidation for consolidation unit C within consolidation group G1 is 500.

The amount for C in consolidation group G2: 400.

No document is posted for parent B in G1 because the document posted in G2 also applies to G1, and because the first consolidation using direct shares is identical.

The amortization of the goodwill of B in C within group G1 differs from that in group G2 as follows:

A minority share of 20% (group share of B=80%) is posted to the amortization of 20 already posted in G2.

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Unit: Consolidation Functions Topic: Consolidation of Investments – Equity Method

5-1 Defining the method:

Define the equity method similar to the solution for the purchase method, using the different FS items and subitems.

Completing the Utilization of Consolidation of Investments

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation FunctionsoAutomatic Posting oConsolidation of investments o Determine System Utilization for C/I

Ensure that the accounting technique Equity is specified.

Defining a consolidation of investments method:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o o Methods o Define methods

Select New entries and create the new method EQUITY.

• Accounting technique: Equity Method

• Additions: calculate using “ direct shares”

The treatment of goodwill already displays the option Amortization (for positive and negative goodwill), as specified in C/I utilization.

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Field/Data Type Value

Accounting technique

Calculate Acquitions Using:

Press Enter.

Amortization of goodwill and

negative goodwill sections:

Amortizable life, number of years

Begin amortization

Equity Method

“direct shares”

5

2

Do not select Threshold value.

Note that you can maintain additional amortization data only after pressing Enter.

Save your entries.

To enter the chart of accounts-based settings for the method, choose FS items to the right of the method description. Select New Entries. Enter the following FS items for BOTH the Amortization of goodwill and Amortization of Negative goodwill.

Field/Data Type Value

Acquisition Item

Subitem

Accumulated amortization item

Subitem, amortization

Subitem, write-ups

Amortization Exp. item

Subitem (Functional area)

Writeup Item

Subitem (Functional area)

Stat. item for pos. goodwill

Stat. item for neg. goodwill

181300 120

181300

220

275

311830

0003 (Administration)

311830

0003 (Administration)

933100

933200

Save your entries.

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5-2 Assigning the method:

In the method hierarchy for consolidation unit E, change the method PURCH to EQUIT.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Methods o Assign methods to the consolidation units o Edit method hierarchies

• Expand your hierarchy, select consolidation unit E, and choose Change.

• In the detail screen, assign method EQUITY to consolidation unit E.

Save your entries.

5-3 Scope of reported data:

To examine the scopes of reported data, go to:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Specify scope of reported data for equity method

The scope entails:

1. Annual net income

2. Dividends

No adjustments should be required.

5-4 Maintaining reported equity items:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Activities o Reported Items for Automatic Activity Recognition o Specify reported items for equity holdings adjustments

Select New Entries

For scope 1 define the item 251200 with subitem 120.

For scope 2 define the item 251600 with subitem 140.

Save your entries.

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5-5 Executing the task for G2:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Posting o Consolidation of investments o Make Global Settings

In the Get earnings from window, choose the “ reported equity data” option. Save.

You execute the task in the consolidation monitor by placing the cursor at the cross-section between the task and the consolidation group G2. Choose Test run.

The amount of the differential from the first consolidation of unit E is USD 400.

The amortization of the excess amount is USD 20.

This is computed as follows: The differential from the first consolidation of 400 is amortized over a period of 5 years, which equates to 80 per year, or 20 per quarter.

Now execute the task in the consolidation monitor by placing the cursor at the cross-section between the task and the consolidation group G1. Choose Update run. Block task when completed.

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Unit: Consolidation Functions Topic: Validation III

The exercises in this topic are optional.

6-1 Assignment:

Assign the validation to consolidation groups G1 and G2:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Validation of Consolidated Data o Assign Validations to Consolidation Groups

Choose New entries and make the following settings:

Field/Data Type Value

Cons group

Period cat.

Val. CG

G1 and G2

2 and 3

VXY (XY = 50 + your group number, which is the validation you already created)

Save the entry.

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6-2 Task:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Validation of Consolidated Data o Define Task Make the following settings for your new entry:

Field/Data Type Value

Task

Short text

Medium text

CONS VAL

Val. GC

Validation consolidated data

Save the entry.

Assign the new task to the task group:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitor o Define Task Group

Select the task group CONS, go to Assign tasks to task group, and make the following new entry:

Field/Data Type Value

Task

Automatic blocking

CONS VAL

select the indicator

Save your entry.

6-3 Execution:

You can execute task Valid. GC in the consolidation monitor by placing the cursor at the cross-section between the task and the consolidation group. Choose Update run.

Menu Path: Accounting o Enterprise Controlling o Consolidation o Consolidation o Monitor

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z Configuration

z Balance Carryforward with� ARE in the balance sheet� ARE in the income statement

Contents:

Balance Carryforward

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z Configure and execute the carrying forward ofbalances

z Differentiate between the various procedures fordealing with appropriation of retained earnings inthe balance sheet and in the income statement

At the conclusion of this unit, you will be able to:

Balance Carryforward: Unit Objectives

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Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalanceBalance carryforward carryforward

Version

Information system

Basis: Individual financial statements in different currencies

Consolidation Steps

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z You want to demonstrate how the balancecarryforward must be executed in EC-CS.

z To do this, you arrange the balance carryforwardand define selected financial statement items.

z You discuss whether the appropriation of retainedearnings is reflected in the balance sheet and, ifapplicable, you carry forward the retained earningssubitems to the FS item ’previous year’s retainedearnings’.The same procedure applies to subitems forminority interest and statistical subitems forretained earnings.

Balance Carryforward: Business Scenario

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Balance sheet Assets 10,000...Liabilities 10,000

Income statementANI 1,000

Balance sheet Assets 10,000...Liabilities 10,000

Income statementBalance carriedforward 1,000

n+1

Closing balanceOld fiscal year

Opening balanceNew fiscal year

Carry-forward

Balance Carryforward

��The closing balance of one year must be identical to the opening balance of the following year. The first task that needs to be performed in the data monitor in a new fiscal year is therefore to carry forward balances from the prior to the current year.

��Balance carryforwards are dependent on the item type and work as follows:

• All balance sheet items are automatically carried forward to themselves by default.

• Income statement items are not carried forward by default.

• When subsequently appropriating retained earnings to the income statement, you create special items so that the annual net income is carried forward from one year to the next.

• You can carry forward statistical items to themselves, if required. To do this, you need to make a setting in the item master record.

• If you want to carry forward items to different items (this is necessary if you show appropriations in the balance sheet), you need to make additional settings in Customizing.

• Balance carryforwards are run for a specified dimension, version, and consolidation chart of accounts. Balances can be carried forward for a consolidation group or for individual consolidation units.

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Period Version 100 Version 200

Assets 10,000...B/S 10,000

ANI 1,000

Assets 10,000...B/S 10,000

ANI 1,000

Assets 10,000...B/S 10,000

ANI 1,000

Assets 0...B/S 0

ANI 0

n+1

012

000

Actual Simulation

Maintain consolidation versions

Consolidation version 100

...

Carry forward version

Technical settings

Balance Carryforward (Version-Dependent)

��Carryforwards are run for individual versions.

��Carryforwards can only be run if you have selected Carry forward version in version maintenance.

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Balance sheet Assets 10,000...Machinery: Open.bal. 2,000Machinery: Acquis. 1,000Machinery: Retirmts 500-

Machinery: Clos.bal. 2,500...Liab.& equity 10,000

Balance sheet Assets 10,000...Machinery: Open.bal. 2,500

...Liab.& equity 10,000

Carry-forward

Year n Year n+1

Balance Carryforward (Subitems)

��At the subitem category level, you determine if the category is relevant for balance carryforwards. Regions and functional areas are not relevant, for example.

��Each subitem category that you mark as relevant for carryforwards is allocated a default subitem. The balance is carried forward to this default subitem unless otherwise specified.

��A carryforward subitem is assigned to each subitem. The carryforward is then made in the next year. This way, you ensure that in a fixed-asset movement schedule, all the current year’s transactions are carried forward to the subitem "Opening balance".

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Year/per. Individual Two-sided Consolidation Consolidated fin. stmnts elimination entry fin. stmnts

1998/006 1,000 500- 100- 4001998/012 2,000 800- 1,200

1999/000 3,000 500- 900- 1,600

Balance Carryforward (by Posting Level)

��Individual posting levels and document types are carried forward separately.

��Additional account assignments (such as partner unit, subitem, year of acquisition) are retained in principle with balance carryforward, but are, however, interpreted depending on the breakdown category of the target item. There may be a summarization (drilldown not planned for target item) or a default account assignment may be set up (target item requires drilldown).

��The values in italics do not exist in the database.

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Retained earnings:� Annual net income B/S 5,000- � Transfers to approp. 1,000-� Deduct. from approp. 2,000+

Annual net income I/S 5,000+

Retained earnings:� Annual net income B/S 0 � Transfers to approp. 0 � Deduct. from approp. 0� Unapp. retd earnings B/S 4,000-

Annual net income I/S 0

123

Maintain items to be carried forward:

FS item in old fiscal year FS item in new fiscal yearAnnual net income B/S (1) Unappropriated ret. earnings B/STransfers to appropriations (2) Unappropriated ret. earnings B/SDeductions from appropriations (3) Unappropriated ret. earnings B/S

Balance Carryforward (Appropriations in B/S)

��Items. All appropriations items must be carried forward to the item "Unappropriated retained earnings".

��Since balance sheet items can only be carried forward to identical items, you need to make further settings in this case:

��Using the menu option "Determine items to be carried forward", maintain all appropriations items and assign them to the item "Unappropriated retained earnings".

• Both the source and target items are balance sheet items, however, so the treatment is different: the balance sheet item is not carried forward to itself, but rather only to the balance sheet item you specified.

• Income statement items are not carried forward by default.

��Annual net income in the balance sheet and income statement must be identical both before and after the carryforward. After the carryforward, the sum of all income statement items must be zero.

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Retained earnings B/S 1,000-

Unappr.ret.earnings I/S 1,000-

Retained earnings I/S 1,000+

Retained earnings B/S 1,000-

Unappr.ret.earnings I/S 1,000-

Retained earnings I/S 1.000+

1

2

3

Maintain items to be carried forward:

FS item in old fiscal year FS item in new fiscal yearAnnual net income B/S (1, 2) Unappropriated ret. earnings I/SAnnual net income I/S (3) Annual net income I/S

Balance Carryforward (Appropriations in I/S)

��For subsequent appropriation of retained earnings to the income statement, you also need to make certain settings for the items to be carried forward. In this case you assign a non-balance sheet item (Unappropriated retained earnings in I/S) to the balance sheet item "Retained earnings". This in turn means that the balance sheet item is carried forward to the same item (1) and additionally to the assigned income statement item (2).

��You must also make an assignment in the income statement for balance sheet retained earnings: this is also to be carried forward to the same item (3). This ensures that retained earnings are identical in the balance sheet and income statement.

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z Configure and execute the carrying forward ofbalances

z Differentiate between the various procedures fordealing with appropriation of retained earnings inthe balance sheet and in the income statement

You are now able to:

Balance Carryforward: Unit Summary

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Balance Carryforward Exercises

Unit: Balance Carryforward

After completing these exercises, you will be able to:

Configure and execute the carrying forward of balances

• After you have completed all your consolidation tasks, you want to create an opening balance for the new fiscal year.

To do this, you need to run a balance carryforward as the first task in the new year.

• Since the cons group G1 states the appropriation of retained earnings in the balance sheet, you need to make certain settings in Customizing, in preparation for the balance carryforward.

1-1 Retained earnings items:

Specify/review that the following retained earnings items are not carried forward onto themselves, but to the item 251100 Retained Earnings - Prior Years:

Field/Data Type Value Retained Earnings - Current Year Retained Earnings - CY Prior to First Consolidation Retained Earnings - ANI Prior to Proportion Change Retained Earnings - Appropriation Transfers Retained Earnings - Appropriation Deductions Retained Earnings - Dividends Paid Retained Earnings - Clearing of Dividends Paid Retained Earnings - Bonus Management Retained Earnings - Clearing Cons of Investments Retained Earnings - Appropriations

251200 251300 251350 251400 251500 251600 251620 251630 251700 251800

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1-2 Minority interest items:

Use the same procedure for the minority interest items. Review that the following entries exist These items are carried forward to item 241100 Minority interest, retained earnings – prior years.

Field/Data Type Value Min. Int. - Ret. Earn. - Current Year Min. Int. - Ret. Earn. - CY Prior to First Consolidation Min. Int. - Ret. Earn. - ANI Prior to Proportion Change Min. Int. - Ret. Earn. - Appropriation Transfers Min. Int. - Ret. Earn. - Appropriation Deductions Min. Int. - Ret. Earn. - Dividends Paid Min. Int. - Ret. Earn. - Dividends Paid Clearing Min. Int. - Ret. Earn. – Bonus Management Min. Int. - Ret. Earn. – Appropriations

241200 241300 241350 241400 241500 241600 241620 241630 241800

1-3 Statistical items:

Use the same procedure for the statistical items. Review that the following entries exist.

These items are carried forward to the item Stat: Retained Earnings- Prior Years (951100). Field/Data Type Value Stat. - Ret. Earn. - Current Year Stat. - Ret. Earn. - CY Prior to First Consolidation Stat. - Ret. Earn. - ANI Prior to Proportion Change Stat. - Ret. Earn. - Appropriation Transfers Stat. - Ret. Earn. - Appropriation Deductions Stat. - Ret. Earn. - Dividends Paid Stat. - Ret. Earn. - Dividends Paid Clearing Stat. - Ret. Earn. – Bonus Management Stat. – Ret. Earn. – Consolidation of Investments Clearing Stat. - Ret. Earn. – Appropriations

951200 951300 951350 951400 951500 951600 951620 951630 951700 951800

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1-4 Defining a task:

• Define task CARRY FWD.

• Copy the task group DATA for the data monitor to DATA2 “Data monitor with carryforward”

• Add the task CARRY FWD to the task group DATA2.

• Finally, assign the task group DATA2 to your dimension for the fiscal year current year + 1/003, for the period category 3.

1-5 Global parameters:

• Change the global parameters to current year + 1/003and run a balance carryforward for cons group G1 from the data monitor.

• Use a database listing in the Info System to check that the contents of the totals database are correct.

• Then block the task.

• Change the parameters back to current year/012.

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Unit: Balance Carryforward Additional Exercises Concerning the Consolidation of Investments:

• On Customizing

• On Other Activities

2-1 Optional Exercises:

2-1-1 Adding missing items:

You determined that an item for the appropriation of retained earnings is missing in your consolidation chart of accounts.

Create the item as well as the other items that need to be assigned. Then make the necessary settings in the IMG.

2-1-2 Entering further activities:

Set the global period/year to 003/current year + 1, execute the task DATA INPUT, and enter additional activities:

Increase/Capitalization

Investment A B 170100 120 + 0% 400 USD 400 USD

Stock Capital B 250100 120 500 USD 500 USD

Step Acquisition

Investment B C 170100 120 + 20% 240 USD 240 USD

Partial Div.

Investment B C 170100 140 - 30% -465 USD -465 USD

2-1-3 Sorting activities:

Check and adjust the order of the activities:

Show the increase in capitalization for B prior to the amortization of goodwill.

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2-1-4 Assigning the task group to the dimension; executing the task:

• Assign the task group CONS to your dimension for the new fiscal year (003/ current year + 1).

• In the consolidation monitor, execute the task C/I in test mode and examine all of the activities for the consolidation groups G2 and G1.

2-1-5 Resetting the parameters:

Change back the global period/fiscal year to 012/current year.

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Balance Carryforward Solutions

Unit: Balance Carryforward

1-1 thru 1-3

Items: Retained earnings, Minority Interest and Statistical

This solution covers exercise 1-1, 1-2 and 1-3.

Menu Path: Implementation Guide for R/3 Customizing o Enterprise Controlling o Consolidation o Data o Carrying forward Balances o Specify FS Items to be Carried Forward

• Select New Entries

• Create an entry for each item to be carried forward. These entries can be found in sections 1-1, 1-2 and 1-3 of the exercises. If entries already exist, review that all required entries have been made for sections 1-1, 1-2, and 1-3 of the exercises.

• Enter each item as the item in the old fiscal year, and make the generic entry * for the subitem, so that all subitems are carried forward.

• The debit and credit items for the new year are identical.

• Enter item 251100 in Exercise, section 1-1,

item 241100 in section 1-2 (minority interest items), and

item 951100 in section 1-3 (statistical items).

Enter subitem 100 in all sections.

Save your entries.

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1-4 Defining a task:

Define task CARRY FWD for carrying forward balances.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Carrying forward balances o Define Task

Select New Entries. Enter task name and texts. Task category is Balance carryforward. Save.

Select task group DATA and copy it along with all subentries to DATA2.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Define task group

Select task group DATA. Choose Copy as icon. Change name to DATA2.

Select Copy all when questioned in the dialog box.

Select task group DATA2 and double-click the Assign tasks to task group detail folder.

Then, add the task CARRY FWD as a new entry. Save.

Create a new entry for effective year current year + 1, effective period 003, and period category 3, and assign task group DATA2.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Data o Data Monitor o Assign Task Group to Dimension Select New Entries. Enter FY effect current year + 1, Period eff. 003, Period cat.

3, Data mon. task group DATA2. Save.

1-5 Global parameters:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Define Global Parameters

Change the fiscal year and the period to current year + 1, period 003.

Run the balance carryforward from the data monitor (which you access from the initial Consolidation application screen). Put your cursor at the intersection between group G1 and the task, and choose Update run.

Menu Path: Accounting o Enterprise Controlling o Consolidation o Data Collection o Monitor

To Review Database listing of Totals Records: From within the Data Monitor:

Menu Path: Goto o Database listing of totals records.

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2-1 Solutions - Optional Exercises

2-1-1 Adding missing items:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Master Data o FS Items o User-defined Chart of Accounts o Maintain Hierarchies of Chart of Accounts o Edit item

Create the following items:

Field/Data Type Value

within stockholders’ equity

FS item

FS item type

Debit/credit sign

Where-applied indicator

Breakdown category

FS item

Breakdown category

FS item

Where-applied indicator

Breakdown category

Carry forward the net balance

250750 Appropriations

Value item

-

Liabilities/equity (B)

6000

240750 Minority Interest – Appropriations

6000

950750 Stat. Appropriations

Statistical item

6100

Check box

• Assign item 240750 to item 250750.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Automatic Postings o Consolidation of Investments o Selected Items o Specify Minority Interest Items

In this case, no assignments need to be made to the appropriation items because the retained earnings are recorded in the balance sheet.

• Assign statistical item 950750 to item 250750.

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling → Consolidation o Consolidation Functions o Automatic Postings o Consolidation of investments o Selected Items o Define Items for Statistical Equity Postings

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2-1-2 Entering further activities:

Change the global parameters and enter the activities in the data monitor as described.

2-1-3 Sorting activities:

Modify the sequence of the activities as follows:

1. In the additional financial data choose Activities for Investee Units.

Menu Path: Accounting o Enterprise Controlling o Consolidation o Data Collection o Additional financial data o Enter o Activities: Investee Units

2. Go to Global Sequence in change mode.

3. Select an increase in capitalization for B.

4. Place the cursor at the activity Amortization of goodwill.

5. Choose Move activities.

6. Save the sequence.

2-1-4 Assigning the task group to the dimension; executing the task:

Menu Path: Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling o Consolidation o Consolidation Functions o Consolidation Monitoro Assign task group to dimension

Once again, assign the task group CONS to your dimension for 003/ current year + 1.

You start the consolidation of investments in the consolidation monitor.

2-1-5 Resetting the parameters:

Change back the global period/fiscal year to 012/current year.

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z Reports for Consolidationz Drilldown reportingz Interactive Excelz Tools

Contents

Information System

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Information System: Unit Objectives

z Call up and evaluate reports from the EC-CSreport tree

z Define Report Painter / drilldown reports yourself

At the conclusion of this unit, you will be able to:

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Consolidation Steps

Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

Version

InformationInformation system system

Basis: Individual financial statements in different currencies

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Information System: Business Scenario

z You check the configuration of EC-CS

z You analyze the consolidated data both in standardreports and in user-defined drilldown and ReportPainter reports

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Information System

R/3R/3

ConsolidationConsolidation

Drilldownreporting

Report Writer Journal entryreports Reports

z master dataz control dataz financial data

Inter-activeExcel

123

CARevenues

B50

Transfer to EIS

��Report Writer and Report Painter:

• Easy to use, powerful standard SAP tools for designing reports

• Special treatment of the version and time-dependency of consolidation groups

��Interactive drilldowns:

• Interactive navigation within the Consolidation data cube

• Reporting of exceptions, ABC analyses, comments, e-mail, integration with MS Office

��Journal entry reports:

• Flexible selection and hierarchical displays of all consolidation documents

��Interactive Excel:

• Logons to R/3 from within MS Excel, interactive connection (ensures current data) with R/3

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Information System: Predefined Reports

PredefinedReports z Master data

- ConsUnits, ConsGroups, where-used list

- FS items, sub-items

z Control data - Versions, tasks - Data entry layouts, upload methods - Currency translation - Interunit elimination - Consolidation of investments - Reclassification

z Additional financial data - Stocks, deliveries, current assets

z Journal entry reporting

z Use of ABAP List Viewer

��The cross-application ABAP List Viewer is used for master and control data

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Journal Entry Reporting

Line itemsLine itemsLine items

Journal entry reportJournal entry reportJournal entry report

Value LC/GCDrilldownto individual itemsFS item Value LC/GC

*

FieldFieldField

.........

Layout CS01-01LayoutLayout CS01-01CS01-01

Display journal entries bydoc. type, doc. number,...Drilldown to document

Sequence Aggregation TextSequence Aggregation TextSequence Aggregation Text

Doc. type 99

700

Doc. type

DOCTYDOCTY 11 99

��With the help of journal entry layouts you can structure the journal entry reports differently.

��You specify the structure of the report in the layout as follows:

• You determine the characteristics (for example document type, document number, financial statement item, subitem and so on), according to how the journal entries should be evaluated, as well as the sequence in which they are to be listed

• enter the currencies or quantity which are to be listed in the value columns of the report.

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Information System: Drilldown Reporting

z Basic conceptsz Reporting typesz Formsz Variablesz External hierarchiesz Report interface

==> Further information about drilldown reporting is

provided in course AC615 - EIS Reporting

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The Principles of Drilldown Reporting

Posting level

FS item

Con

s un

it

Reported data

StandardizationsEliminations

Assets Inventories Sales

US

AD

EG

B

Report

��Characteristics determine how the dataset is classified. Consolidation unit, item, and posting level are just some examples of characteristics. Note that time categories (fiscal year, period, and so on) are also seen here as characteristics.

��The master data includes the permitted values of a characteristic (characteristic values). Combinations of characteristics or characteristic values are often referred to in the documentation as objects.

��If there are three characteristics, the relationship between them can be illustrated using the above graphic. A cube is created. The sides represent the various characteristics (consolidation unit, item, and posting level in this example). Each characteristic is sub-divided into several characteristic values. The slices represent combinations of characteristic values. One possible evaluation object might be the consolidation unit Germany, item Sales, and the posting level Reported data.

��There are many key figures in your application that might be relevant to the evaluation process. Key figures in EC-CS are values from transaction, local, and group currencies, and quantity calculations, based on formulas that you have defined.

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The Architecture of Drilldown Reporting

MS-WORD

ExcelPrint

Forms

ReportsGraphics

E-Mail

Key figures Characteristics

DrilldownDrilldown Report Report

Create

Execute

ChangeChange

��As you can see in the above illustration, you can include characteristics, key figures, and forms in your report definitions. The end result of a report is a number of online accessible report lists and graphics displayed on screen.

��Drilldown reporting itself contains easy-to-use functions for navigating through the dataset. For example, the next step, the next object within a step, hide a step, detail list, drilldown list. It also contains a number of interactive report-editing functions, for example, sorting data, defining conditions or ranking lists. You can also send report lists (for example, by fax), post them onto the Internet, or transfer them as a file to Word and Excel.

��As well as the online report-display functions, there are various report-printing functions in drilldown reporting that enable you to structure your report’s print layout to suit your own requirements. For example, you can insert page breaks and headers and footers, or underline text.

��A form defines the basic content and technical design of report listings. A form can be seen as a semi-finished component of a report that will be completed later on with characteristics and key figures when the report is defined. Characteristics are part of both the form and the report itself. Key figures can either be selected in the form or in the report.

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Key Figures

z Key figure: Value-carrying figurez Amount figure, quantity figure

� "Revenue" (currency amount)� "Number of employees" (quantity)

z Basic key figures� Local currency� Group currency� Transaction currency� Quantity

z Calculated key figures

��Key figures are not only values and quantities, but also calculations based on formulas that you have defined.

��They determine how the data set (characteristics) is portrayed.

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Characteristics

z Characteristic� Non-value-carrying figure� Classifies the dataset

z Types� Time reference: fiscal year, period� Version� Organizational units: cons unit, partner unit, investee

unit, cons group� Account assignment: Item, subitem, and so on� Custom characteristics

z Characteristic groups� Combination of characteristics to improve overview of

definitions and call-ups

��Examples for characteristics are the SAP organizational units and master data (dimension, version, item, subitem). Time reference (fiscal year, period) is also a characteristic.

��Characteristic group: When defining a report form, you can specify a characteristic group on the characteristic selection screen. This also narrows down the selection of characteristics for the report definition. Damit können Sie zum Beispiel bei kundendefinierten Merkmalen die Übersicht der verfügbaren Merkmale verbessern.

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Types of Drilldown Reports

z Basic reportA quick way to set up a report by:

� Selecting variables� Selecting characteristics� Selecting key figures

z Form reportA way to create custom-defined reports with:

� Form-based layout� Special formatting (colors, separators, etc.)

��Basic reports: Users often choose this procedure when they start a spontaneous, ad-hoc search for a business matter in the dataset, and they do not know beforehand where and what they are searching for. It is relatively easy to set up this kind of report.

��Form reports: These are more complicated to set up and are more specific. This procedure is often chosen for official reporting and is particularly suited to report printing.

��A distinction is made between reports that are defined spontaneously (basic reports), and reports that are based on pre-defined forms. The latter are called form reports. Form reports are based on forms with either one coordinate or two, depending on their complexity.

��A form is not required for a basic report. When you define a basic report, you select the characteristics you wish to report on, and also the key figures and variables of interest.

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Basic Reports

ValueValue in in...-...- currency currency

Annual netAnnual netincomeincome

AssetsAssets

InventoryInventory

z Each characteristic can be restricted to one characteristic value

z The selected characteristics form a multi-dimensional datacube

z The key figures form the columns in the report

z A basic report is defined by specifying characteristics and key figures

Key figureKey figure

CharacteristicCharacteristic valuesvalues

��You should choose the basic report if you are carrying out a spontaneous, ad-hoc search for non-specific business details in the dataset.

��The basic report’s structure is simple and fairly general.

��To define a basic report, enter the variables (such as dimension, cons group, year, period, and version) and select which characteristics and key figures you want to view.

��The following characteristics are predefined in ad-hoc reports: dimension, totals consolidation group, version, year.

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Different Form Types

Plan. Act. Var. Plan. GC Act. GC OPN ACQ RET

Buildgs

Machns

One axis withno key figure

One axis withkey figure

Two axes(matrix)

Create report with form

��The following types of forms are available:

• Single-axis form without key figures: When you define single-axis forms without key figures, you choose which characteristics you want and then specify whether they should appear in the form as columns or rows. When you use the Basic screen function, the first screen you see is an empty list containing only columns.

• Single-axis form with key figures: When you define single-axis forms with key figures, you choose which characteristics and key figures you want and then specify whether they should appear in the form in columns or rows. When you use the Basic screen function, the first screen you see is an empty list containing only rows.

• Dual-axis form with key figures: When you define dual-axis forms with key figures, you choose which key figures and characteristics you want and define rows and columns with them. When you use the Basic screen function, the first screen you see is an empty list containing rows and columns. You choose whether to display the key figures in columns and the characteristics in rows or vice versa. What you choose depends on what you want to report on.

��When you create a form, you determine its name and type.

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Forms

Low

High

z One axis with no key figure� Columns defined with characteristics only� Report: Further characteristics and key figures� Example: Planned-actual comparison

z One axis with key figure� Columns with characteristics and key figures� Report: Further characteristics� Example: Planned-actual comparison in group

currency

z Dual axis form (matrix)� Parallel display of values by 2

independent dimensionsEx: Asset history sheet (asset item x sub-item)

� Complex cell formatting, as required� Report: Further characteristics

CO

MP

LEX

ITY

��In a one axis form with no key figures, the columns are defined with characteristics only. You can define further characteristics within the form, with the help of a formula (for example deviation as the difference between the current year and the prior year). The selected characteristics in the form make the contents of the columns more precise. The selection of key figures and drilldown characteristic, that means the characteristics with whose characteristic values you want to navigate in the report, are carried out in the report definition (for example characteristics: organizational units, FS item; key figures: value in group currency). In the drilldown list, you receive a two line column header, where the key figures are in the first line and underneath it, each selected characteristic is listed in the form. The values of the drilldown characteristics are in the lines. In the detail list the characteristics, which are selected in the form, are in the columns, while the key figures are listed in the lines. The detail list shows the results of a selected characteristic value.

��In a one axis with key figure form, you specify the key figures which you can link with the selected characteristics, in the lines of the form. You can create further key figures within a form with a formula. Then in the report definition you only select the drilldown characteristics.

��In the dual axis form you define the lines as well as the columns. In this way you can include the key figures in the lines or the columns of the form as desired. Then in the report definition you only select the drilldown characteristics.

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Variables: Overview

z Global and local variablesAll variables are defined either as global or local

� A global variable:

� Begins with &

� Is valid for all reports or forms

� Is defined centrally (in Customizing)

� Example: Dimension

� A local variable:

� Begins with $

� Is valid for one report or one form only

� Is defined in the report or the form

� Example: Assets

��Variables allow you to define your forms or reports flexibly. They are parameters in your report or form that you specify when you define or execute your report. Whether you create a global or local variable depends on how often it will be used.

��If you want to create a variable that will only be used in one specific form or report, you should create a local variable. This will only be valid in that form or report. If you define a local variable in a form, it will, however, be valid in each report that uses that form. If you define a local variable in the report itself, it will only be valid in that particular report.

��If you want to use variables frequently, you should create global variables. This means that you can use them in all forms and reports. Global variables are maintained in Customizing. Once you have maintained them, you can use global variables in a form or report by selecting them using the Possible entries function.

��Note: Bear in mind that if you change a variable, this will affect all the reports and forms that use it.

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Creating Form Reports: Overview

1 Create form� General selections� Layout (incl. key figures, if applicable)

2 Define report� Choose key figures, if applicable� Choose characteristics for

navigation/restriction� Restrict characteristics or define as variables� Predefine variables with values� Define characteristics with external hierarchies

for example cons unit, FS item

3 Execute report� Make adjustments as appropriate

(report header, number formats, characteristic display, format display, and so on)

ReportsGraphics

DrilldownDrilldown Report Report

ChangeChange

Forms

Execute

Create

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Report Execution: Overview

ReportsGraphics

z Drilldown listz Detail listz Navigation

Detail list Æ Drilldown listDrilldown list Æ Detail list

z Drilldown� To analyze/explode totals

��Detail list: It contains the key figures in rows, the layout corresponds to that of the form.

��Drilldown list: It contains the presentation corresponding to the selected characteristics (for example a consolidated balance sheet with breakdown by assets and liabilities and owner’s equity). The key figures are in the columns.

��In the drilldown list you can carry out a drilldown in order to analyze individual values. For example you can expand the asset items to the item fixtures and fittings.

��After that you can select a different presentation for this item, by selecting another characteristic for the drilldown list, for example the presentation of the item fixtures and fittings for an individual consolidation group.

��You can navigate between the individual drilldown lists. In every drilldown list, you can go to the corresponding detail list. You can also go back to the original drilldown list again, the basic list which is displayed when you call up the report. Then you can start a new drilldown.

��In the report definition, you specify whether you display the detail list or the drilldown list when you call up the report.

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External Cons Group Hierarchies

Display in list

z FS items� Cons chart of accounts� FS item hierarchy or� Totals item

z Cons groups (cons units, partner units)� Dimension� Totals cons group (determines hierarchy section)� Version� Year� Period

Selection criteria:

� Report with cons group (CG): Break down by cons units for version, current fiscal year/period (if no other entry)

� Report without CG: Report presentation by selected cons units

��Please note the following prerequisites with the report definition in EC-CS.

��Reports with an analysis by consolidation group

• Version must be unambiguous for each cell

• If you do not execute any special accrual, FYM = (Fiscal Year) Maximum and PM = (Period 16) Maximum are calculated for each cell

• The consolidation group is broken down into cons unit for each combination of version, FYM, and PM.

��Report without consolidation group

• The cons units specified in the selection criteria are selected.

��Hierarchies serve to portray the dataset in a certain hierarchical form. The hierarchies can either consist of the EC-CS organizational units or of items of a consolidation chart of accounts.

��In this way you can design the drilldown report in a hierarchy display according to your own evaluation aims.

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EC-CS: Special Features of Drilldown Reporting

Layout forgrouping

Hierarchies:BS (Bal. sheet)IS (Income statement)STAT (statistical items)BS

IS

STAT

Balance sheet

01/BS Balance sheet

0101

Assetscurrentassets

...Liabilities

� Cons chart of accounts, FS items

� Dimension, cons group, version, fiscal yr, period

� The EC-CS report requires,as standard, selection by:

� The drilldown report offersstandardized selection parameters

� Hierarchy class for cons groups: CSCG

� Hierarchy class for FS items: CSIT

��In EC-CS when you want to generate a report using one or more consolidation groups, you always have to differentiate by the characteristics dimension, consolidation group, version, year and period. When defining and calling up the report, you can propose necessary recurring accruals in a display hierarchy, as standard.

��For the presentation of the values of a cons group, you define a FS item hierarchy: it contains the consolidation chart of accounts and a defined quantity of totals item and value items.

��By using hierarchies for consolidation groups and FS items, you make the maintenance and execution of a report easier.

��In every hierarchy you define,

• which layout the hierarchy display should have (for example presentation of a FS item hierarchy with lines and empty rows)

• whether you want a top-down presentation or a bottom-up hierarchy of your hierarchy.

• how far the hierarchy is expanded when you call up the report for the first time.

��For the forwarding of drilldown reports to EC-EIS and the formatting of data by means of the graphic user interface inSight (company Arcplan), you have to create hierarchy names for organizational units and FS items.

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Report Call: External Hierarchies

Assets→ Ιnventory → Cash → Securities→ ΤΑ → Investment

1612 5 7 4 4

Report:• Totals item = Assets → Value = 16• Totals item = Cash → Value = 5• Item = Assets → Value = 0• Item = Cash → Value = 5

Caution when mixing items and totals items

Selection criteria

z Cons group Totals cons group� Version/year/period dependency

z Hierarchy display from item/cons group only(not from totals cons group/totals item)

z Easy selection via totals item and totals cons group

z Item Totals items

��You can structure the EC-CS master data (characteristics FS items and cons groups) using totals items and totals consolidation groups according to your own hierarchy requirements. The consolidation groups are contained in the totals consolidation group, via which you want to portray the values in the report. The totals consolidation group is automatically formed from the top-consolidation group.

��The EC-CS master data is version/year and period-dependent. The entered accruals must be identical with the parameters for which the totals consolidation group is valid. This means that when you have entered your group structure in version 100, you cannot select the report for version 200. The same restrictions also apply to the items.

��Item hierarchies can only be displayed for the characteristic item. You use the characteristic consolidation group if you want to display drilldowns of consolidation groups in a hierarchy display.

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Reporting Interface

Sender report

Variables• Task = 50• Group = G1• Version = 100• Year = 1997

Characteristic value• Period = 12

Navigation characteristics • Cons unit = A• Item = 380000• Posting level• Subitem

Receiver report

Variables• Dimension• Group• Version• Year• Period• Cons unit• FS item• Posting level• SubitemNavigation characteristics • Document type• Partner unit

← 50← G1← 100← 1997← 12← A← 380000NavigationNavigation

DimensionGroupVersionYearPeriodCons unitFS item

50G1

1001997

12A

380000

Example: Drilldown to Drilldown

��You can call other reports from a drilldown report:

• Other drilldown reports and other applications (EC-PCA)

• Report Writer reports

• Transactions (such as master data)

• Other ABAP reports (such as EC-CS line item reports)

• ABAP queries

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Information System - Interactive Excel

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Interactive Excel

MS AccessOffline Data Entry

Interactive Excel

ReportingReporting

Update Update

Database connection

EC-CSEC-CS

��You can use Interactive Excel to analyze current data from an R/3 System or from Microsoft Access in data matrices or pivot tables.

��You can use Interactive Excel to create reports on data from the following sources:

• central Access or R/3 database

• an Access database residing locally on your PC

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Principles behind Interactive Excel

z Microsoft Excel as user interface� Standard Excel functions:

� Easy-to-use, highly flexible� Fonts, borders, alignment, patterns, colors� Formulas, graphics, snapshots

� SAP functions for importing EC-CS data from and saving it to:� R/3 database� Microsoft Access database for the offline data entry program

z Database connection� Logon to an EC-CS database from a Microsoft Excel report� Automatic/manually-triggered refresh of report data� Layout not affected by refresh

��Interactive Excel enables you to evaluate data in the following report types:

• Data matrices

• Pivot tables

• Additions to reports, for example charts

��In a report, you evaluate financial data for various characteristics and combinations of characteristics. In order to simplify definition of a report, you can use lists of proposals for the characteristics predefined in Interactive Excel by accessing master data and control parameters that exist in an R/3System or MicrosoftAccess database. However, you are also free to define your own report or part of a report without using values from Access, and to apply any formatting that you require.

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Interactive Excel - Logon to R/3 or Access

LogonLogon

User

Password:

Database:

******

C:\Users\DEMO\Eccs\ActiveXL

****** Open

More...

Browse...

SAPSAP Interactive Interactive Excel Excel

File Edit View Insert Format Tools Data ConsolidationWindow ?

6

7

8

9

10

11

12

15

B C

Cash and Cash Equivalents

Net Receivables

128638 USD

17045 USD

SAP R/3SAP R/3 Logon Logon

User DataClient

User

Password

Language

003

SKARL

******

DE

OK

Cancel

---------

1998C9000

Parent Company 12

Total Assets 2928956 USDTotal Current Assets 145683 USD

B/Sheet

��Logging on to Microsoft ACCESS: In the dialog box, enter your user name and password for the PC data entry program and specify the relevant database file and path, if necessary using the Browse function.

��The entries that you make here are defaults the next time you log on. You only need to reenter the password.

��Logging on to an R/3 System: You are connected to the database and the item Consolidation for Interactive Excel is added to the standard Excel menu. Additional functions appear under the menu item SAP.

��Loading of interface texts for Interactive Excel

• When using an Access database The interface texts for Interactive Excel are stored in the Access database and originate in the R/3 System. You specify the text language when you download master data and control parameters from the central R/3 System into the database.

• When using the R/3 System as the database When you enter the language while logging on to the R/3 System this also determines the interface language for the Interactive Excel.

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Interactive Excel - Report with Active DB Link

SAP Interactive ExcelSAP Interactive Excel

File Edit View Insert Format Tools Data ConsolidationSAP ?

B

Cash and Cash EquivalentsNet Receivables

--------- Window

InventoriesOther Current AssetsDeferred Tax Assets

InvestmentsGoodwill - NetProperty,Plant and Equipment,net

A

100000100100

110000119000135000140000150000

170000180000190000

C

1857237 CAD9810246 CAD

29810471 CAD835714 CAD

91381184 CAD

C4000

5 6 711232831343540516364

1 C4000

Total AssetsTotal Current Assets

133694853 CAD42313669 CAD

160000 Total Fixed Assets 91381184 CAD

100000100100

Logged onTable 1

CAD: Canadian Dollar

��This central function of Interactive Excel enables you to do the following:

• Save reported financial data from a data entry form to the Access database

• Import up-to-the-minute data into reports defined in Interactive Excel

• Use master data and control parameters stored in the database as default values when defining data entry forms and reports

��Communication between Interactive Excel and the database: Data can be transferred between Interactive Excel and a database as follows:

• After data entry you can post the data from Interactive Excel to an Access database of the offline data entry program or directly to the database in the R/3 System.

• You can import data from an Access database or an R/3 System into an Interactive Excel report.

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Interactive Excel - Refreshing Report Data

z Refresh Automatic refresh

After characteristic values are changed in a sheet

(for example, fiscal year, period, version, cons unit, cons group, FS item) . .

Manually triggered refresh Active matrix Worksheet Workbook When you next log on to EC-CS database

z Snapshot Current worksheet Current workbook

��The Refresh function enables you to overwrite data in an Interactive Excel matrix report with up-to-the-minute data from a database. Data can be imported into one or more reports via an interactive connection to an R/3System or MicrosoftAccess database.

��Prerequisite: You have opened an Interactive Excel workbook in which a matrix report is defined.

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Interactive Excel - Report Definition (1)

z Microsoft Excel template "SAPActiveXL"z Definition of data matrices

Characteristics Cons groups, cons units, FS items, and so on . .

Key figures Local/group currency, cumulative/periodic value Reported financial data, standardized financial data,

consolidated data Any position on the Excel sheet Any number of matrices in a sheet

z Definition using possible entries Single values, sets, hierarchies Attributes for EC-CS master data

��You use data matrices to enter financial data in an Access database for the offline data entry program

��The parent in a consolidation group usually decides whether it will define the data entry matrices for all subsidiaries using Interactive Excel, or whether it will allow the subsidiaries to define their own matrices.

��Using data matrices you can create reports on the basis of current financial data in an R/3 System or Access database for the offline data entry program

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Interactive Excel - Report Definition (2)

z Display options Scaling Currency key Debit/credit sign logic

Database values Debit = positive, credit = negative Values as per item sign Liabilities positive Inverted database values Net sales positive, revenue negative

Hierarchy Color Indented levels

Style templates Cells for data entry / cells in which data

cannot be entered

��Select an aspect for the matrix. An aspect determines the source or target database for matrix data, for example the R/3 consolidation application EC-CS from which you want to import data into reports, and whose master data and control parameters you want to use for the matrix definition. The aspect is automatically valid for all other matrices until you choose a different aspect.

��The +/- sign logic determines the debit and credit signing used for entering data or displaying data imported from the database.

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Interactive Excel - Definition of Data Matrix

SAP Interactive ExcelSAP Interactive Excel

File Edit View Insert Format Tools Data ConsolidationSAP ?

Scaling:User name:Last refresh:Dimension:

--------- Window

Aspect:

Cons chart of accounts:Version:Key figure:

1

01

CS

01100

LV LC CD

Bal. SheetMatrix name:

CS Company consolidation

EC-CS: Consolidation

Worldwide chart of accountsPresentationLV I, local currency, cumulated

Table

Data MatrixData Matrix

Matrix name

Dr/Cr sign logic

Scaling

Values as per item sign

1

Bal. Sheet

---

Settings

Return units

Data entry matrix

Data MatrixData Matrix

CopyLV LC CD I LV I, Local crcy

Characteristics

Long text Value... Long text

DimensionCons C/AVersionFiscal yearPeriodFS itemConsolidation...

0101100

CS Company consWorldwide chart of ...Presentation

Single values Sets Fixed value

--

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Interactive Excel - Possible Entries

SAPSAP Interactive Interactive Excel Excel

File Edit View Insert Format Tools Data ConsolidationSAP ?--------- Window

B

Cash and Cash EquivalentsNet ReceivablesInventoriesOther Current AssetsDeferred Tax Assets

InvestmentsGoodwill - NetProperty,Plant and Equipment,net

A

100000100100

Total AssetsTotal Current Assets

110000119000135000140000150000

170000180000190000

160000 Total Fixed Assets

C

1166082 CAD

C4000Canada

100000100100

Table 1

Item HierarchyItem Hierarchy---

PossEntr.

Output format

Horizontal

ID

VerticalLong text

Color

11

BS Balance Sheet100000 Total Assets100100 Total Current Assets110000 Cash and Cash Equivalents119000 Net Receivables... ...

Depth

1,857,237 CAD9,810,246 CAD

29,810,471 CAD835,714 CAD

91,381,184 CAD

42,313,669 CAD

91,381,184 CAD

Values for ConsValues for Cons.. Unit Unit---------

Output format

C1000 GermanyC2000 United KingdomC2300 FranceC3000 BelgiumC4000 CanadaC4100 Australia... ...

Horizontal

ID

Vertical

Long text

PossEntr.

��The example shows you how to use a list of proposed values to define a characteristic as a single value and insert it into the matrix.

��Place the cursor on the cell in which you want to insert a characteristic value. In the Interactive Excel menu, choose Consolidation ® Single values and then the characteristic you want.

��A dialog box appears with a list of values for the characteristic. Depending on the characteristic that you are defining, values for other characteristics that you have already specified, and on which the values in the proposal list are dependent, may appear in fields at the top of the box.

��The values are inserted at the cursor position, either beside or beneath each another (depending on the alignment selected). If you select multiple values, these are inserted in the sequence in which they are listed in the database. Single values can be formatted, moved, deleted or changed after insertion into a worksheet.

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Interactive Excel - Security

z Logon to R/3 / Microsoft Access� User/password same as for direct logon

z Importing/exporting EC-CS data� R/3 authorizations� Validation when data saved to database

z Saving a complete “Interactive Excel” report� Write-protection with password lock� Digital signature

z Documentation� Origin of data in individual cell/matrix� Displayed in dialog box or inserted into a report

��A security function is available, using which you can protect reports against unintentional or unauthorized changes.

��This function locks an entire workbook so that no changes can be made to the row and column layout. It thereby prevents an automatic refresh of data that could result from such changes.

��You can still do the following, even with the lock in place: • import current data from the database • change characteristic values in the header data

��Lock with signature When you lock a workbook, you can insert a signature box at the cursor position. This contains information about the lock and the refreshing of the reporting data.

��You can display and, if required, print information about the parameters for the data in a cell. This can, for example, be useful if you cannot identify the origin of the data in a cell to the characteristic values displayed in the worksheet or you want to check whether the values are correct. If data has been calculated using an Excel formula, the formula is displayed. Data that has been entered directly into the sheet is identified as a constant.

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Interactive Excel - Digital Signature

SAPSAP Interactive Interactive Excel Excel

File Edit View Insert Format Tools Data SAP ?--------- Window

100100 160000

200100 240000

Total Fixed Assets

Total LiabilitiesMinority Interest

Total Current Assets913811 CAD

483503 CAD

1166082 CAD100000252270 CAD

Total Assets

250000 Shareholder’s Equity 682578 CAD

Table 1

All the reports were refreshed during the following period:Oldest matrix: 22.05.98 00:51:28 (B/Sheet)Newest matrix: 22.05.98 00:51:28 (B/Sheet)Last refresh was carried out by:User name: admin

The report definition in this Interactive Excel workbook is protected against changes:

200000 Total Liabilities and Stockholders Equity 1166082 CAD

The lock was set up by:User name: adminDate: 22.05.98 01:00:25

��When you lock a workbook, you can insert a signature box at the cursor position. This contains information about the lock and the refreshing of the reporting data.

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Information System: Unit Summary

z Call up and evaluate reports from the EC-CSreport tree

z Define drilldown reports yourself

You are now able to:

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Information System - Exercises

Unit: Information System Topic: Journal Entry Reporting

1-1 Optional exercise:

Defining a layout:

In this part of your presentation, you define a journal entry layout LXY-00001 (XY = your dimension) with the following structure:

• Document number

• Entry date

• Time of entry

• User name

• Line item

• Consolidation unit

• FS item

• Subitem

• Partner unit

• Value in local currency

• Value in group currency

Specify that you want to calculate totals in the line item field

Have the text of the item be printed as well.

Start the journal entry report for your consolidation group, run the drilldown, and analyze the documents.

1-2 Defining a further layout:

Define journal entry layout LXY-00002 (XY = your dimension) with a different structure:

• document type, FS item, consolidation unit, partner unit, and value in group currency.

• Totals should be calculated for consolidation units and FS items.

• A text should be displayed for document types and FS items.

Analyze the change in annual net income as a result of the elimination of interunit payables and receivables.

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Unit: Information System Topic: Drilldown Reporting

2-1 Defining an ad report:

Define the ad-hoc report RXY-00001 called Analysis (XY = 50 + your group number).

• The following variables should be available when the report is started:

- View, totals consolidation group, version and year

Check and adjust the default values if necessary.

• The values should be displayed in group currency (o key figure).

• The report should provide a drilldown by the characteristics FS item, consolidation unit, subitem, posting level, and document type.

• Sort your characteristics in the order shown above.

The function is located in the Extras menu.

• Confine the ledger to the value “US”.

• Select the entire consolidation chart of accounts as the hierarchy for characteristic FS item.

• Specify your top consolidation group as the hierarchy for characteristic consolidation unit.

The function is located in the Extras menu; or you will be prompted when you save your entries.

• Save and execute the report.

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Navigating in drilldown reports:

• Analyze the item Property, Plant & Equipment by consolidation units and then by subitems. What is the amount of the increase in Property, Plant & Equipment for consolidation unit C?

• What amount was eliminated from the item Common Stock during the consolidation of investments?

• Show the characteristics with/without name/ID.

• Display the consolidation units and FS items with/without the hierarchy.

• Select the item Annual Net Income and sort the consolidation units by their proportion to the total consolidation value. Which consolidation unit has the smallest value?

• Change the scaling of value columns.

• Finally, show and hide the display of the currency key in the column heading.

2-2 Optional exercise: Defining a form report:

You need a report called RXY-00002 Valuation Changes from Local to Consolidated.

• First, define the form RXY-00002 using a coordinate and a key figure.

• Choose the characteristics ledger and dimension and assign to them the value “US” and/or assign a variable ($1).

• The form should contain the following columns (elements):

- reported financial data, standardization, payables, dividend, equity, total

• For all elements select “Key figure with characteristics” in group currency, and specify the appropriate headings.

• Restrict the first column to the characteristic posting level.

• Restrict the next four columns to the characteristic document type (with the values 10, 21, 23, and 51).

Note: You can copy the elements.

• The last column should display the consolidated total value. Hence, no selection is required.

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Now, define the report:

• Available characteristics are totals consolidation group, consolidation group, consolidation unit, partner unit, investee unit, version, year, and FS item.

• Restrict the characteristics totals consolidation group, version, and year to a variable (always $1) and then, assign your default values to the variables.

• Define the hierarchy selection for each characteristic and save the report.

• Assign journal entry reporting to the report using the report-report interface. The application class is ECMC, the report type is RT (ABAP report), and the program name is FICJER00.

• Start the report and analyze the items Investment (170100), Goodwill (180000), IC Receivables (130100) and Retained earnings, current year (251200).

• Observing the item IC Receivables, familiarize yourself with the difference between drilldowns by consolidation units and drilldowns by consolidation groups.

2-3 Optional exercise Defining a further form report:

As in the last exercise, define the report RXY-00003 Prior Year Comparison, which uses the one-dimensional form RXY-00003.

• Values are displayed in group currency.

• The form contains the following general selections:

- Ledger (“US”) and dimension (variable $1)

• The columns contain:

- current year, prior year, absolute difference, relative difference

Specify $FYR for the current year, and $FYR-1 for the prior year.

• The report should contain the further variables totals consolidation group and version.

• Enable drilldowns by consolidation unit and FS item.

• Assign the Valuation Changes from Local to Consolidated to the report using the report-report interface.

• What is the amount of IC Receivables from consolidation unit A?

• Look for this VALUE in the valuation changes report, drilled down by partners.

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2-4 Optional exercise: Define the report RXY-00004 Asset History Sheet, which uses the form RXY-00004 with 2 coordinates.

• The form uses the following variables:

- View, totals consolidation group, version and year

Specify the consolidation chart of accounts and your ledger under the general selections.

• Values are displayed in group currency.

• The columns contain:

- Beginning balance (100, 200), acquisition (120, 220), retirement (140, 240), transfer (170, 270) and ending balance (as a row total).

• The rows contain:

- Items 191500, 195500, separator line, and total of both rows

• Choose the characteristic consolidation unit and appropriately fill the variables.

• What is the amount of the net ending balance for consolidation unit A ?

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Information System - Solutions

Unit: Information System Topic: Journal Entry Layout

1-1 Optional exercise

Defining a layout:

SAP Menu o Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling → Consolidation o Information System o Define Journal Entry Layouts

Use the possible entries function (F4 function key) to select the technical names for the fields:

For example, choose DOCNR document number,

specify the position 1 for this field so that the document number is listed first

Field/Data Type Value

Layout

DOCNR document number

CPUDT entry date

CPUTM time of entry

USNAM user name

DOCLN Line item;select Totals

RBUNIT consolidation unit

RITEM FS item,select Fld.text

SUBIT subitem

RBUPTR partner unit

HSL local currency

KSL group currency

LXY-00001

Position 1

Position 2

Position 3

Position 4

Position 5

Position 6

Position 7

Position 8

Position 9

Position 10

Position 11

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Start the journal entry layout for your consolidation group:

SAP Menu o Accounting o Enterprise Controlling o Consolidation o Information System o Journal entries

1-2 Defining a further layout:

Define the journal entry layout as in exercise 1-1.

Field/Data Type Value

DOCTY Document type, select Fld.text

RITEM FS item, select Totals and Fld.text

RBUNIT Cons unit, select Totals

RBUPTR partner unit

KSL Value in group currency

Position 1

Position 2

Position 3

Position 4

Position 5

Run the journal entry report and expand document type 21 “Elim. of IU payables/receivables”.

Put your cursor on the FS item 251200 and see how annual net income has changed for your consolidation units.

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Unit: Information System Topic: Drilldown Reporting

2-1 Defining an ad hoc report

Define the ad-hoc report RXY-00001 called Analysis (XY = 50 + your group number).

SAP Menu o Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling → Consolidation o Information System o Drilldown Reports o Define Reportso Create Drilldown Report Enter report name and description and Report type Basic.

Select Variables tab:

• The following variables should be available when the report is started:

- View, totals consolidation group, version and year

Check and adjust the default values if necessary.

Select Key Figures tab:

• The values should be displayed in group currency (o key figure).

Select Characteristics tab:

• The report should provide a drilldown by the characteristics FS item, consolidation unit, subitem, posting level, and document type.

• Confine the ledger to the value “US”.

• Sort your characteristics in the order shown above.

The function is located by pressing Sort Free Characteristics icon at bottom.

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• Select the entire consolidation chart of accounts as the hierarchy for characteristic FS item.

Specify your top consolidation group as the hierarchy for characteristic consolidation unit.

The function is located by pressing the Hierarchy icon at bottom; or you will be prompted when you save your entries.

• Save and execute the report.

Navigating in drilldown reports:

• Analyze the item Property, Plant & Equipment by consolidation units and then by subitems. What is the amount of the increase in Property, Plant & Equipment for consolidation unit C?

• What amount was eliminated from the item Common Stock during the consolidation of investments?

• Show the characteristics with/without name/ID.

• Display the consolidation units and FS items with/without the hierarchy.

• Select the item Annual Net Income and sort the consolidation units by their proportion to the total consolidation value. Which consolidation unit has the smallest value?

• Change the scaling of value columns.

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2-2 Optional exercise: Defining a form report:

You need a report called RXY-00002 Valuation Changes from Local to Consolidated..

SAP Menu o Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling → Consolidation o Information System o Drilldown Reports o Define Formso Form for Creating Reports

• First, define the form RXY-00002 using a coordinate and a key figure

Choose the characteristics ledger and dimension and assign to them the value “US” and/or assign a local variable ($1). Confirm.

Edit oGen Data Selection o Gen Data Selection

• The form should contain the following column (element) texts:

- reported financial data, standardization, payables, dividend, equity, total

• For all elements select “Key figure with characteristics” in group currency, and specify the appropriate headings.

Double click each element and select key figure with characteristics.

• Restrict the first column to the characteristic posting level.

Element1 (Column 1) should have posting level with values from 0 to 00.

• Restrict the next four columns to the characteristic document type (with the values 10, 21, 23, and 51).

Note: You can copy the elements.

• The last column should display the consolidated total value. Hence, no selection is required. Double-click last column and select formula.

Now, define the report:

SAP Menu o Tools o Accelerated SAP o Customizing o Edit Project o SAP Reference IMG o Enterprise Controlling → Consolidation o Information System o Drilldown Reports o Define Reportso Create Drilldown Report

Enter Report name and description. Select Report with form and enter form just created. Press Create.

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On Characteristics tab:

• Available characteristics are totals consolidation group, consolidation group, consolidation unit, partner unit, investee unit, version, year, and FS item.

Restrict the characteristics totals consolidation group, version, and year to a local variable (always $1) and then, assign your default values to the variables.

Press Hierarchy icon

• Define the hierarchy selection for each characteristic and save the report.

Select Extras→ Report assignment

• Assign journal entry reporting to the report using the report-report interface. The application class is ECMC, the report type is RT (ABAP report), and the program name is FICJER00. Select insert row icon, then Other report type icon, enter RT and then program name. Save.

• Execute the report and analyze the items Investment (170100), Goodwill (180000), IC Receivables (130100) and Retained earnings, current year (251200).

• Observing the item IC Receivables, familiarize yourself with the difference between drilldowns by consolidation units and drilldowns by consolidation groups.

2-3 Optional exercise Defining a further form report:

As in the last exercise, define the report RXY-00003 Prior Year Comparison, which uses the one-dimensional form RXY-00003.

Define Form:

• Values are displayed in group currency.

• The form contains the following general selections:

- Ledger (“US”) and dimension (variable $1)

• The columns contain:

- current year, prior year, absolute difference, relative difference

Specify $FYR for the current year, and $FYR-1 for the prior year.

Now define the report RXY-00003:

• The report should contain the further variables totals consolidation group and version.

• Enable drilldowns by consolidation unit and FS item.

• Assign the Valuation Changes from Local to Consolidated to the report using the report-report interface.

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• What is the amount of IC Receivables from consolidation unit A in the year 1998?

Look for this value in the valuation changes report, drilled down by partners.

2-4 Optional exercise: Define the report RXY-00004 Asset History Sheet, which uses the form RXY-00004 with 2 coordinates.

Define the form RXY-00004:

• The form uses the following variables:

- View, totals consolidation group, version and year

Specify the consolidation chart of accounts and your ledger under the general selections.

• Values are displayed in group currency.

• The columns contain:

- Beginning balance (100, 200), acquisition (120, 220), retirement (140, 240), transfer (170, 270) and ending balance (as a row total).

• The rows contain:

- Items 191500, 195500, separator line, and total of both rows

Define the report RXY-00004:

• Choose the characteristic consolidation unit and appropriately fill the variables.

• What is the amount of the net ending balance for consolidation unit A ?

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Versions

z Purposes of versions

z Add-on versions

z Special versions

z Restatement via reporting

Contents

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Versions: Unit Objectives

z Describe the tasks of a version

z Combine different special versions and re-usethese when creating a new consolidation version

z Differentiate between alternative procedures forrestatements: versions or report definition

At the conclusion of this unit, you will be able to:

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Consolidation Steps

Create master data

Standardizing entries for corporate valuation of data

Currency translation

Aggregated financial statements

Interunit elimination

Elimination of IU profit/loss (transferred assets, inventory assets)Consolidation of investments

Consolidation of investmentsReclassifications

Consolidated financial statements

Consolidation of investmentsBalance carryforward

VersionVersion

Information system

Basis: Individual financial statements in different currencies

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Versions: Business Scenario

z To finish, you want to portray different datasetsseparately from one another in your businessscenario.

z To do this you define different versions that havethe same configuration charactersitics.

z Using the restatement as an example, demonstrateother possibilities of portraying datasetsdifferently.

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z Data categories� Actual, budget, forecast, multi-year planning, and so on

z Simulation� The effect of different exchange rates� The effect of step acquisitions, divestitures, and so on

z Restatement� Applying the current “settings” to prior period data

z Multiple GAAPs� Parallel consolidated statements according to IAS and HGB

z Value Based Management (VBM)� Adjustments to the “regular” statement prior to calculating performance ratios

Version Concept - Applications

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z Base version (or simply “version”)� Disjoint subset of the consolidation database� Option of copying all/part of data between versions

z Add-on version� References a base version (or another add-on version)� Available for the totals database and for hierarchies

z Special Version� For additional financial data (for example, investment, equity data)� For method assignments (for example, consolidation of investments)� Reduces redundancy

z Reporting� Use of reporting (without a new version) for restatements, if no

group-dependent postings exist

Version Concept - Terms, Functionality

��You can carry out consolidations in different consolidation versions. This enables you to carry out alternative consolidations, such as simulations, plannings, restatements, and so on parallel to the consolidation of the actual data.

��You can, for example, use different versions to manage, consolidate and compare different reporting data for comparisons and simulations.

��You can open new versions at any time

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Add-On Versions in the Totals Database

Add-on versionJP GAAPReference to base version 1

Version 2 Actual - JapaneseGAAP

Version 3 Simulation ofDivestitureAdd-on versionUS GAAPReference to base version 1

Version 4 Simulation ofTranslationBase versionUS GAAPCopy of base version 1

Version N Budget, Plan, Forecast

Base versionUS GAAP

Purpose Other GAAP

Different data

Simulation

Restatement

Reference

Reference

Copy

Repetition of data collection

Base versionUS GAAP

Version 1Actual - US GAAP

��Add-on versions can contain additional reporting data and/or maunal/automatic postingsd required for a specific country. They include a reference to a base version

��Example of the use of add-on versions

• Version 1 consists of the consolidated statements according to US GAAP.

• Version 2 consists of additional financial data and/or manual or automatic postings. Version 2 reflects Japanese GAAP in conjunction with version 1.

��Drilldown Reporting and the Report Writer

• When the reporting functions use an add-on version, the data of all referenced versions are automatically used, as well.

��Consolidation functions and the rest of the Information System:

• Always work with the data of “their” version

• Have no relationship to the referenced data of other versions.

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Special Versions in EC-CS

Cons version 001 Actual

Data entry 001

Ledger 001

Selected FS items 001

Structure 001

... 001

ExchangeExchange rates rates

Reclassifications 001

... 001

Data entry 001

Ledger 001

Selected FS items 001

Structure 001

... 001

ExchangeExchange rates rates

Reclassifications 001

... 001

Ledger

Version From

001 USD

002 USD

To ExRt

DEM 1.50

DEM 1.80

Cons version 002 Plan

Exchange rates

001001 002002

��A consolidation version is composed of special versions. These cover the different consolidation areas. For example, there are the sepcial versions "data entry", "tax rate", "translation methods". This enables you to define various consolidation versions that differ only in one or a few areas, but otherwise refer to the same special version (that is, data is not redundant).

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Special Versions in EC-CS (Procedure)

Customizing

ConsolidationConsolidationversionversion

Global parameters

Special

Ledgerversion

Special

Version

...

Special

Version

Translationmethod

Summary data Data processing

��Control parameters, which are identical in various consolidation versions, need only be maintained once in special versions.

��All the special versions you require to consolidate your data you assign to the consolidation version in Customizing

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Special Versions - A Currency Translation Example

Reported data Exchange rates

Actual / local Plan / local Actual Plan

USD

1,5

USD1,8REV

EXPNETINC

1008020

REVEXPNETINC

15012030

Actual data - Act.ratesVersion 001

Actual data - Plan ratesVersion 002

Plan data - Plan ratesVersion 003

Consolidated income statementsConsolidated income statements

REVEXPNETINC

REVEXPNETINC

180144

36

270216

54

REVEXPNETINC

150120

30

��You can carry out simulations to analyze the different effects of:

• Different valuation options

• Exchange rates

• Restatements

• Different reporting data (actual/plan)

��Using the version concept you can, for example, combine your versions for actual and plan data with alternative currency translation methods

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Restatement via Reporting

ReportReport withwith RestatementRestatementReportReport w/ow/o RestatementRestatement

Drilldown

TOP

SEG1 SEG2

BA1

10

BA3

20

BA4

30

SEG1 SEG2

BA1

20

BA4

35

BA5

15

BA3

40

BA2

20

BA2

30

Sales

TOP

SEG1

SEG2

BA3BA4BA5

1997

90

40

50

1998

130

80

50

50

03515

SEG1

Sales

TOP

BA1

BA2

BA3

BA4

BA5

1997

90

60

10

30

20

30

30

0

1998

130

80

20

20

40

50

35

15

1997 1998TOP

50

2030 0

SEG2SEG2

��Using versions you can prepare restatements, that is, apply the current "settings" to data of a previous period

��For example, if you changed the consolidation hierarchy, you could report the data of the previous fiscal year in the new hierarchy as a restatement.

��In this example you see data from 1997 and 1998

��On the right-hand side you see that BA3 has been regrouped to SEG1, although this did not occur until 1998. The report therefore contains value 0 for SEG2/BA3

��On the right-hand side of the report the data from the previous fiscal year has been included in the new hierarchy and also reported In simple cases, you can perform such restatements using the functions of reporting without using a new version.

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Restatement via Drilldown Reporting

TOP

SEG1 SEG2

BA1

10

BA3

20

BA4

30

SEG1 SEG2

BA1

20

BA4

35

BA5

15

BA3

40

BA2

20

BA2

30

ReportReport with Restatement with Restatement

1997 1998TOP

In the column1997 + 1998 the datafor bothyears is automaticallyanalyzed with thehierarchy of the mostrecent year.

Therefore, thedifference columnshows values as of1997 using thehierarchy of 1998.

SEG1

Sales

TOP

BA1

BA2

BA3

BA4

BA5

1997 (difference)

90

60

10

30

20

30

30

0

1998

130

80

20

20

40

50

35

15

1997 + 1998

220

140

30

50

60

80

65

15

not shown

SEG2

��You could effect the restatement using a drilldown report if the report does not include postings that are dependent on the consolidation group.

��In a column that is not displayed the values of BA3 from 1997 and 1998 are added together and BA3 is assigned to the hierarchy of the current (most recent) year

��BA3 therefore appears in the current hierarchy, the 1997 column (difference between the toal and the value from 1998) contains the value from 1997

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Versions: Unit Summary

z Describe the tasks of a version

z Combine different special versions and re-usethese when creating a new consolidation version

z Differentiate between alternative procedures forrestatements: versions or report definition

You are now able to:

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z Consolidation of Investments:Mutual Stock Method

z Cons chart of accounts

Contents

Appendix

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Mutual Stock Method (First Consolidation)

GTS (purchase)

G1P1

S (purchase)

G2P2

S (mutual stock)

60 %

30 %

Investment P1 in S: 600Investment P2 in S: 300

Common stock of S: 1000

First consolidation entries:

G1Investment (P1) 600Common stock (S) 1000Min. interest (S) 400

G2Investment (P2) 300Min. interest (S) 300

GTSum of documents from G1 and G2(no further entries are required)

��The mutual stock method may only be used for managerial consolidations (internal purposes). It is an alternative to the equity method when the group share is less than 50%. (Thus, ’G2’ may not be a legal entity.)

��This accounting technique is typically applied when a consolidation unit is included in the upper hierarchy level using the purchase method, and the same unit also belongs to another consolidation group in a lower hierarchy level, where the unit is included using the mutual stock method.

��The reporting of financial data is similar to the equity method, that is, the financial data is not included.

��The adjusting entry complements that of the purchase method at the same hierarchy level. Hence, no further entry is needed in the top consolidation group ’GT’.

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Mutual Stock Method (Subsequent Consolidation)

GTS (purchase)

G1P1

S (purchase)

G2P2

S (mutual stock)

60 %

30 %

Investment P1 in S: 600Investment P2 in S: 300

Common stock of S: 1000

Subsequent consolidation entries:

G1Annual net income (S) 40MI annual net income (S) 40

G2Annual net income (S) 30MI annual net income (S) 30

GTSum of documents from G1 and G2(no further entries are required)

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Mutual Stock versus Equity Method

G1 Investment (P1) 600 Investment (P1) 600Common stock (S) 1000 Common stock (S) 1000Minority interest (S) 400 Minority interest (S) 400

G2 Investment (P2) 300 no document as no goodwillMinority interest (S) 300 created

GT Total of documents from G1 and Investment (P1) 600G2 (no further entries) Investment (P2) 300

Common stock (S) 1000Minority interest (S) 100

G1 Annual net income (S) 40 Annual net income (S) 40MI ann. net income (S) 40 MI ann.net income (S) 40

G2 Annual net income (S) 30 Investment (P2) 30MI ann. net income (S) 30 Annual net income (S) 30

GT Total of documents from G1 and Annual net income (S) 10G2 (no further entry) MI ann. net income (S) 10

Firs

t con

solid

atio

nS

ubse

quen

t con

s.

��One advantage of the mutual stock method is that it shows the annual net income at the affiliate, whereas in the equity method, the annual net income becomes part of the parent’s earnings from the affiliate.

��One disadvantage of the mutual stock method is its obstinate logic in posting minority interest. However, minority interest usually plays an insignificant role in managerial consolidation.

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Cons C/A

Dimension 01

Cons Chart of Accounts 01

Version 100 Act. Version

Period 012 / 1998

Item Medium Text for FS Items IT S MItm CI ARE BPE BCat

100000 A S S E T S 2 +

100100 TOTAL CURRENT ASSETS 2 +

110000 CASH AND CASH EQUIVALENTS 2 +

110100 Cash 1 + 205700

110200 Securities 1 +

119000 NET RECEIVABLES 2 +

120000 Account Receivable - Net 2 +

120100 Trade Receivables 1 +

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120200 Doubtful Receivables 1 +

125000 Other Receivables 2 +

125100 Notes Receivable 1 +

125200 Interest Receivable 1 +

125300 Miscellaneous Receivables 1 + SAP0

130000 Intercompany Receivables 2 +

130100 IC Trade Receivables 1 + 110

130200 IC Notes Receivables 1 + 110

130300 IC Interest Receivable 1 + 110

130500 IC Due to/from 1 + 110

131000 IC Elimination of Payables/Receivables 1 + X

135000 INVENTORIES 2 +

135100 Raw Materials and Operating Supplies 1 + A3

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135200 Unfinished Goods and Services 1 + A3

135300 Finished Products from Purchasing 1 + A3

135400 Finished Products from Production 1 + A3

139900 Clearing of IU Profit/Loss in Inventory 1 + X

140000 OTHER CURRENT ASSETS 2 +

140100 Prepaid Insurance 1 +

140200 Other Current Assets 1 +

150000 DEFERRED TAX ASSETS 2 +

150100 Deferred Tax Assets 1 +

150200 Deferred Tax Assets - Value Adjustment 1 +

160000 TOTAL FIXED ASSETS 2 +

170000 INVESTMENTS 2 +

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170100 Investments in Subsidiaries - Purchase 1 + 1100

170200 Investments in Subsidiaries - Proportional 1 + 1100

170300 Investments in Subsidiaries - Equity 1 + 1100

170400 Investments in Parent Company’s Common Stock 1 + 1100

180000 GOODWILL - NET 2 + 1000

181000 Goodwill 2 + X 1000

181100 Goodwill - Purchase 1 + X 1000

181200 Goodwill - Proportional 1 + X 1000

181300 Goodwill - Equity 1 + X 1100

181400 Goodwill - Push Down Method 1 + 1000

185000 Accum. Goodwill Amortization 2 - X 1000

185100 Accum. Goodwill Amortization - Purchase 1 - X 1000

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185200 Accum. Goodwill Amortization - Proportional 1 - X 1000

185300 Accum. Goodwill Amortization - Equity 1 - X 1000

185400 Accum. Goodwill Amortization - Push Down Method

1 - 1000

190000 PROPERTY, PLANT AND EQUIPMENT 2 + 1000

191000 Property, Plant & Equipment 2 + 1000

191100 Land and Real Estate 1 + 1000

191200 Buildings 1 + 1000

191300 Furniture and Fixtures 1 + 1000

191400 Transportation Equipment 1 + 1000

191500 Machinery and Equipment 1 + 1000

195000 Accumulated Depreciation 2 - 1000

195200 Accumulated Depreciation - Buildings 1 - 1000

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195300 Accumulated Depreciation - Furniture and Fixtures

1 - 1000

195400 Accumulated Depreciation - Transportation Equipment

1 - 1000

195500 Accumulated Depreciation - Machinery & Equipment

1 - 1000

200000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 2 -

200100 TOTAL LIABILITIES 2 -

200200 TOTAL CURRENT LIABILITIES 2 -

201000 Trade Payables 2 -

201100 Trade Payables 1 -

201200 Miscellaneous Trade Payables 1 -

205000 Other Payables 2 -

205100 Notes Payable – Current Portion 1 -

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205200 Bonds Payable – Current Portion 1 -

205300 Accrued Interest Payable 1 -

205400 Accrued Wages Payable 1 -

205500 Accrued Income Taxes Payable 1 -

205600 Dividends Payable 1 -

205700 Miscellaneous Payables 1 - 110100 SAP0

210000 Intercompany Payables 2 - 110

210100 IC Trade Payables 1 - 110

210200 IC Notes Payable 1 - 110

210300 IC Interest Payable 1 - 110

210400 IC Dividends Payable 1 - 110

Page 363: AC660 ECCS

© SAP AG AC660 A-8

215000 Income Taxes Payable 2 -

215100 Income Taxes Payable - Federal 1 -

215200 Income Taxes Payable - State 1 -

215300 Income Taxes Payable - Foreign 1 -

220000 Other Taxes Payable 2 -

220100 Sales and Use Tax Payable 1 -

220200 Foreign Withholding Taxes Payable 1 -

220300 Property Taxes Payable 1 -

225000 Deferred Income Taxes 2 -

225100 Deferred Taxes Payable - Federal 1 -

225200 Deferred Taxes Payable - State 1 -

225300 Deferred Taxes Payable - Foreign 1 -

Page 364: AC660 ECCS

© SAP AG AC660 A-9

225400 Deferred Tax Payables -Value adjustment 1 +

230000 TOTAL LONG TERM LIABILITIES 2 -

235000 LONG TERM DEBT 2 -

235100 Notes Payable - Long Term Portion 1 -

235200 Bonds Payable - Long Term Portion 1 -

236000 Remaining Negative Differential from C/I 1 - 5000

239999 B/S Business Area – Clearing Account 1 -

240000 MINORITY INTEREST 2 - X 6000

240100 Minority Interest - Common Stock 1 - X 6000

240200 Minority Interest - Common Stock - ESOP Shares

1 - X 6000

240300 Minority Interest - Subscribed Capital Stock 1 - X 6000

240400 Minority Interest - Preferred Stock 1 - X 6000

Page 365: AC660 ECCS

© SAP AG AC660 A-10

240500 Minority Interest - Additional Paid-In Capital

1 - X 6000

240600 Minority Interest - Treasury Stock 1 - X 6000

240700 Min. Int. - Treasury Stock, Reciprocal Holdings Bet.

1 - X 6000

240800 Minority Interest - Dividends Payable 1 - X 6000

240900 Minority Int. - Currency Translation Differences

2 - X 6000

240910 Min. Int. - Cur.Transl.Diffs - Prop, Plant & Equip

1 - X 6000

240920 Min. Int. - Cur.Transl.Diffs - Investments 1 - X 6000

240930 Min. Int. - Cur.Transl.Diffs - Stockholders´Equity

1 - X 6000

240940 Min. Int. - Cur.Transl.Diffs - Other 1 - X 6000

240945 Min. Int. – Cur.Transl.Diffs (TC) 1 - 6010

Page 366: AC660 ECCS

© SAP AG AC660 A-11

240950 Min. Int. - Cur.Transl.Diffs - Rounding 1 - X 6000

241000 Minority Interest - Retained Earnings 2 - X X 6000

241100 Minority Interest - Ret. Earnings - Prior Years

1 - X 6000

241200 Minority Interest - Ret. Earnings - Current Year

1 - X 6000

241300 Min. Int. - Ret. Earn. - CY Prior to First Cons

1 - X X 6000

241350 Min. Int. – Ret. Earn. – ANI Prior to Prop. Change

1 - 6000

241400 Min. Int. - Ret. Earn. - Appropriation Transfers

1 - X X 6000

241500 Min. Int. - Ret. Earn. - Appropriation Deductions

1 - X X 6000

241600 Min. Int. - Ret. Earn. - Dividends Paid 1 - X X 6000

241620 Min. Int. - Ret. Earn. - Dividends Paid Clearing

1 - X 6000

241630 Min. Int. - Ret. Earn. - Bonus Management 1 - X X 6000

Page 367: AC660 ECCS

© SAP AG AC660 A-12

241800 Min. Int. - Ret. Earn. - Appropriations 1 - X 6000

247000 Minority Interest - Investments in Subsidiaries

2 - X 6000

247010 Min. Int. – Investments in Subsid. - Purchase 1 - X 6000

247020 Min. Int. – Investments in Subsid. - Proportional

1 - X 6000

247030 Min. Int. – Investments in Subsid. - Equity 1 - X 6000

247040 Min. Int. – Investments in Common Stock of Parent

1 - X 6000

250000 SHAREHOLDERS’ EQUITY 2 - 6000

250050 Total Subscribed Common Stock 2 - 6000

250100 Common Stock 1 - 6000

250200 Common Stock ESOP Shares 1 - 6000

250300 Subscription Receivables 1 - 6000

Page 368: AC660 ECCS

© SAP AG AC660 A-13

250400 Preferred Stock 1 - 6000

250500 Additional Paid-In Capital 1 - 6000

250600 Treasury Stock 1 + 6000

250700 Treasury Stock - Reciprocal Holdings 1 + 6100

250800 Stock Dividends to be Distributed 1 - 6000

250900 Currency Translation Differences 2 - X 6000

250910 Currency Translation Differences - Prop.,Plant & Equip.

1 - X 6000

250920 Currency Translation Differences - Investments

1 - X 6000

250930 Currency Translation Differences - Stockh. Equity

1 - X 6000

250940 Currency Translation Differences - Other 1 - X SAP1

250945 Currency Translation Differences – Other (TC) 1 - 6010

Page 369: AC660 ECCS

© SAP AG AC660 A-14

250950 Currency Translation Differences - Rounding 1 - X 6000

251000 Retained Earnings 2 - 6000

251100 Retained Earnings - Prior Years 1 - X 6000

251200 Retained Earnings - Current Year 1 - 6000

251300 Retained Earnings- CY Prior to First Cons 1 - 6000

251350 Retained Earnings – ANI Prior to Proportion Change

1 - 6000

251400 Retained Earnings - Appropriation Transfers 1 - X 6000

251500 Retained Earnings – Appropriation Deductions 1 + X 6000

251600 Retained Earnings - Dividends Paid 1 - X 6000

251620 Retained Earnings - Dividends Paid 1 - 6000

251630 Retained Earnings - Bonus Management 1 - X 6000

251700 Retained Earnings - Clearing Cons of Investment

1 - X X 6000

Page 370: AC660 ECCS

© SAP AG AC660 A-15

251800 Retained Earnings - Appropriations 1 - 6000

300000 Net Sales 2 -

301000 Sales 2 -

301100 Sales (Third Party) 1 - A4

301200 Intercompany Sales 1 - A5

302000 Sales Discounts and Returns 2 -

302100 Sales Discounts and Returns (Third Party) 1 - A4

302200 IC Sales Discounts and Returns 1 - A5

303000 Cost of Goods Sold 2 +

303100 Cost of Goods Sold (Third Party) 1 + A4

303200 IC Cost of Goods Sold 1 + X A5

304000 Gross Operating Profit from Sales 2 -

Page 371: AC660 ECCS

© SAP AG AC660 A-16

305000 Total Expenses 2 +

306000 Operating Income 2 -

310000 Operating Expenses 2 + 2000

310100 Materials Expenses 1 + 2000

310200 Inventory Valuation 1 + 2000

310300 Packaging Materials Expense 1 + 2000

310400 Distribution Expenses 1 + 2000

310500 Heating and Electricity Expenses 1 + 2000

310600 Subcontractor Services 1 + 2000

310700 Wages and Salaries 1 + 2000

310800 Pension and Employee Benefits Expense 1 + 2000

310900 Payroll and Withholding Expense 1 + 2000

311000 Medical Expense 1 + 2000

Page 372: AC660 ECCS

© SAP AG AC660 A-17

311100 Building and Equipment Maintenance Expense 1 + 2000

311200 Insurance Expense 1 + 2000

311300 Auto Expense 1 + 2000

311800 Goodwill Amortization Expense 2 + X 2000

311810 Goodwill Amortization -Purchase 1 + X 2000

311820 Goodwill Amortization -Proportional 1 + X 2000

311830 Goodwill Amortization -Equity 1 + X 2000

311840 Goodwill Amortization -Push-down 1 + 2000

311900 Depreciation Expense 2 + 2000

311920 Depreciation Expense - Buildings 1 + 2000

311930 Depreciation Expense - Furniture and Fixtures 1 + 2000

311940 Depreciation Expense - Transportation Equipment

1 + 2000

Page 373: AC660 ECCS

© SAP AG AC660 A-18

311950 Depreciation Expense - Machinery and Equipment

1 + 2000

312400 Rent Expense 1 + 2000

312500 Postage and Shipping Costs 1 + 2000

312600 Telephone Expense 1 + 2000

312700 Travel Expenses 1 + 2000

312800 Supplies Expense 1 + 2000

312900 Other General Expense 1 + 2000

313000 Other Administrative Expense 1 + 2000

313100 Professional Fees 1 + 2000

320000 Other Income and Expense 2 +

320100 Interest Income 1 -

320200 IC Interest Income 1 - 100

320300 Dividend Income 1 -

Page 374: AC660 ECCS

© SAP AG AC660 A-19

320400 IC Dividend Income 1 - 100

320500 Other Income 1 -

320600 IC Other Income 1 - 100

320650 Revenue from Divestitures 1 -

320700 Interest Expense 1 +

320800 IC Interest Expense 1 + 100

320900 Other Expense 1 +

321000 Loss from Write-Down Investments 1 +

321100 IC Other Expense 1 + 100

321150 Expense from Divestitures 1 +

321200 Equity in Net Income of 20 - 50% Subsidiaries 1 - 200

Page 375: AC660 ECCS

© SAP AG AC660 A-20

321300 Exchange Rate Gains (Losses) 1 -

330000 Income before Taxes 2 -

335000 Income Tax Provision 2 +

340000 Income Tax Provision - Current 2 +

340100 Income Tax Provision - Current - Federal 1 +

340200 Income Tax Provision - Current - State 1 +

340300 Income Tax Provision - Current - Foreign 1 +

350000 Income Tax Provision - Deferred 2 +

350100 Income Tax Provision - Deferred - Federal 1 +

350200 Income Tax Provision - Deferred - State 1 +

350300 Income Tax Provision - Deferred - Foreign 1 +

360000 Income from Continuing Operations 2 -

360050 Non-Continuing Operations 2 +

Page 376: AC660 ECCS

© SAP AG AC660 A-21

360100 Gain (Loss) - Discontinued Operations - Net of Tax

1 -

360200 Gain (Loss) - Extraordinary Items - Net of Tax

1 -

360300 Gain (Loss) - Change in Accounting Principle - Net

1 -

370000 Net Income before Minority Interest 2 -

370100 Minority Interest 1 -

380000 Net Income 2 -

390000 Annual Net Income 1 +

910000 Selected Item for Cur.Translation Affect.Earnings

1 + X

930000 Stat: Other Items 2 - X

931000 Stat: Annual Net Income 2 - X

931100 Total Annual Net Income 1 - X

Page 377: AC660 ECCS

© SAP AG AC660 A-22

931200 Total Annual Net Income - Offset 1 + X

931300 Minority Interest in Annual Net Income 1 - X

931400 Minority Interest in Annual Net Income - Offset

1 + X

931500 Adjusted Annual Net Income 1 - X

931600 Adjusted Annual Net Income - Minority Interest

1 - X

932000 Stat:Stockholders’ Equity for Equity Method 2 - X

932100 Stat: Annual Net Income for Equity Method 1 - X

932200 Stat: Dividends for Equity Method 1 - X

932300 Stat: Bonus Management 1 - X

932400 Stat: Currency Translation Differences 1 - X

932500 Stat: GW Elimination in Cons Group 1 - X

932600 Stat: Adjustment of Prior Period Earnings 1 - X

Page 378: AC660 ECCS

© SAP AG AC660 A-23

933000 Stat: Goodwill 2 - X 100

933100 Stat: Positive Goodwill 1 - X 100

933200 Stat: Negative Goodwill 1 + X 100

939000 Stat: General Offsetting Item 1 - X

950000 Stat: Stockholders’ Equity 2 - X 6100

950100 Stat: Common Stock 1 - X 6100

950200 Stat: Common Stock ESOP Shares 1 - X 6100

950300 Stat: Subscription Receivables 1 - X 6100

950400 Stat: Preferred Stock 1 - X 6100

950500 Stat: Additional Paid-In Capital 1 - X 6100

950600 Stat: Treasury Stock 1 - X 6100

950700 Stat: Treasury Stock Reciprocal Holdings 1 - X 6100

950800 Stat: Stock Dividends to be Distributed 1 - X 6100

Page 379: AC660 ECCS

© SAP AG AC660 A-24

950900 Stat: Currency Translation Differences 2 - X 6100

950910 Stat: Cur.Transl.Diff. - Prop., Plant & Equipment

1 - X 6100

950920 Stat: Cur.Transl.Diff. - Investments 1 - X 6100

950930 Stat: Cur.Transl.Diff. - Stockholders’ Equity

1 - X 6100

950940 Stat: Cur.Transl.Diff. - Other 1 - X 6100

950945 Stat: Cur.Transl.Diff. - Other (TC) 1 - 6110

950950 Stat: Cur.Transl.Diff. - Rounding 1 - X 6100

951000 Stat: Retained Earnings 2 - X 6100

951100 Stat: Retained Earnings - Prior Years 1 - X 6100

951200 Stat: Retained Earnings - Current Year 1 - X 6100

951300 Stat: Retained Earnings- CY Prior to First Cons

1 - X 6100

Page 380: AC660 ECCS

© SAP AG AC660 A-25

951350 Stat: Retained Earnings – ANI Prior to Prop. Change

1 - X 6100

951400 Stat: Ret. Earnings - Appropriation Transfer 1 - X 6100

951500 Stat: Ret. Earnings - Appropriation Deductions

1 - X 6100

951600 Stat: Retained Earnings - Dividends Paid 1 - X 6100

951620 Stat: Retained Earnings – Dividends Paid Clearing

1 - X 6100

951630 Stat: Retained Earnings - Bonus Management 1 - X 6100

951700 Stat: Ret. Earnings - Clearing Cons of Investments

1 - X 6100

951800 Stat: Retained Earnings - Appropriations 1 - X 6100

962000 Stat: Neg. SH Equity for Equity Method 2 - X

962100 Stat: Neg. SH Equity - Annual Net Income f. Equity

1 - X

962200 Stat: Neg. SH Equity - Dividends f. Equity 1 + X

Page 381: AC660 ECCS

© SAP AG AC660 A-26

962300 Stat: Neg. SH Equity - Bonus Management 1 - X

962400 Stat: Neg. SH Equity - Currency Translation Diffs

1 - X

962500 Stat: Neg. SH Equity - GW Elimination in Cons Group

1 - X

962600 Stat: Neg. SH Equity - Adjusted Pr.Period Earnings

1 - X

C-1000 Group Share 1 + X

C-2000 Group Share with Voting Rights 1 + X

C-3000 Group Share without Voting Rights 1 + X

C-4000 Group Share in Annual Net Income 1 + X

C-5000 Group Share, Direct 1 + X


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