Consolidation rules

Consolidation is the process that transforms individual financial statements for a group of entities into a single financial statement. In the United States, this process creates a consolidated financial statement based on US Generally Accepted Accounting Principles (GAAP), the standard that applies to external, or statutory, financial reporting. To create a consolidated financial report, companies that own all or part of other companies must create financial reports to meet both internal and external reporting requirements.

A Consolidation rule performs the account transformations that are required to consolidate data in a multi-company scenario. The types of consolidation that are performed depend on the ownership relationship between the companies that are involved.

  • When the business relationship between the companies involves ownership shares, consolidation is performed in a way that eliminates transactions such as intercompany investments and equity. In this situation, consolidation includes tasks such as calculation of minority interest.

  • When the parent company fully owns all the subsidiary companies, no share calculations are necessary.

Planning Business Modeler provides predefined rule templates for consolidation. The templates contain placeholders for dimension and account information that should be customized to fit the business situation. For information about how to customize these rules, see Consolidation rule templates.

Rules in a Consolidation rule set may not be run individually. To run a Consolidation rule set, run the Consolidation job. For more information about the jobs that run a consolidation rule set, see About Consolidation jobs.

The following table describes the rule templates that are predefined for consolidation. Rules written from these templates perform different kinds of Intercompany Eliminations (ICE).

Rule Description

ICE for Investment

Eliminates investments that a holding company has in subsidiaries.

ICE for Equity

Eliminates equity that a holding company has in subsidiaries, and creates a minority interest equity amount.

ICE for P and L

Eliminates intercompany transactions, and creates minority interest in net profit and loss.

ICE for Balance Sheet

Eliminates intercompany balances.

See Also