How To Fix G00426 - Option of posting goodwill to investee is invalid for equity method

SAP Error Message - Details

• Message type: E = Error

• Message class: G00 - SAP Consolidation

• Message number: 426

• Message text: Option of posting goodwill to investee is invalid for equity method

What causes this issue?

The accounting technique "equity method" is assigned to C/I method &V1&.
In this case, the option 'post goodwill to investee unit' is not valid.
Therefore, you also cannot select the option 'carry goodwill in local
currency'.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Correct the definition of method &V1& in Customizing of C/I.

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message G00426 - Option of posting goodwill to investee is invalid for equity method ?

  The SAP error message G00426, which states "Option of posting goodwill to investee is invalid for equity method," typically arises in the context of financial accounting and consolidation processes, particularly when dealing with investments in associates or joint ventures using the equity method.
  Cause:
  This error occurs when there is an attempt to post goodwill related to an investment in an associate or joint venture using the equity method, but the system settings or configurations do not allow for this. The equity method of accounting does not permit the recognition of goodwill directly in the investee's financial statements. Instead, goodwill is generally accounted for at the level of the investor.
  Solution:
  To resolve this error, consider the following steps:
  
  
  Check Configuration Settings:
  
  Ensure that the settings for the equity method in your SAP system are correctly configured. This includes checking the settings for goodwill and how it is treated in the context of equity investments.
  
  
  
  Review Investment Accounting:
  
  Verify that the investment is correctly classified as an equity method investment. If the investment should not be treated as such, you may need to adjust the classification.
  
  
  
  Goodwill Posting:
  
  If you need to account for goodwill, it should be done at the level of the parent company, not at the investee level. Ensure that any goodwill related to the investment is recorded appropriately in the parent company's financial statements.
  
  
  
  Consult Documentation:
  
  Review SAP documentation or help resources related to equity method accounting to ensure compliance with accounting standards and SAP system requirements.
  
  
  
  Seek Expert Assistance:
  
  If the issue persists, consider consulting with your SAP support team or a financial accounting expert who is familiar with SAP and the equity method of accounting.
  
  
  
  Related Information:
  
  Equity Method Accounting: Under the equity method, the investor recognizes its share of the investee's profits or losses in its own financial statements. Goodwill is not recognized in the investee's financial statements but is instead reflected in the investor's balance sheet.
  SAP Financial Accounting (FI): Familiarity with the SAP FI module and its configuration settings is essential for troubleshooting this type of error.
  Accounting Standards: Be aware of the relevant accounting standards (such as IFRS or GAAP) that govern the treatment of goodwill and investments in associates.
  
  By following these steps and understanding the underlying principles, you should be able to address the G00426 error effectively.