How To Fix UCF6854 - Complete reduction of goodwill is not permitted

SAP Error Message - Details

• Message type: E = Error

• Message class: UCF6 - Messages for Consolidation of Investments

• Message number: 854

• Message text: Complete reduction of goodwill is not permitted

What causes this issue?

The amount of goodwill cannot be completely reduced because <ZK>No or
Complete Reduction</> is <ZH>not </>selected in the consolidation of
investments settings for goodwill reduction.

System Response

The data record cannot be processed.

How to fix this error?

In the investment data, set the indicator for complete reduction of
goodwill to a space (" ").

Procedure for System Administrators

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

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message UCF6854 - Complete reduction of goodwill is not permitted ?

  The SAP error message UCF6854, "Complete reduction of goodwill is not permitted," typically occurs in the context of financial accounting and consolidation processes within SAP, particularly when dealing with goodwill in mergers and acquisitions.
  Cause:
  This error message is usually triggered when there is an attempt to fully reduce or eliminate goodwill that has been recognized in the financial statements. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. In many accounting frameworks, including IFRS and GAAP, there are specific rules regarding the treatment of goodwill, including impairment testing and the conditions under which goodwill can be reduced.
  Common Scenarios Leading to the Error:
  
  Incorrect Configuration: The system may be configured in a way that does not allow for the complete reduction of goodwill.
  Accounting Standards Compliance: The accounting standards being followed may not permit the complete reduction of goodwill without proper impairment testing.
  Data Entry Errors: Incorrect entries in the financial data or consolidation settings may lead to this error.
  
  Solution:
  To resolve the UCF6854 error, consider the following steps:
  
  
  Review Goodwill Accounting: Ensure that the treatment of goodwill complies with the relevant accounting standards (IFRS, GAAP). Goodwill should only be reduced through impairment testing, not through direct reduction.
  
  
  Check Configuration Settings: Review the configuration settings in SAP related to goodwill and consolidation. Ensure that the settings allow for the appropriate treatment of goodwill.
  
  
  Perform Impairment Testing: If there is a need to reduce goodwill, conduct an impairment test to determine if the carrying amount of goodwill exceeds its recoverable amount. If it does, you can recognize an impairment loss.
  
  
  Consult Documentation: Refer to SAP documentation or help resources for specific guidance on handling goodwill in your version of SAP.
  
  
  Seek Expert Advice: If the issue persists, consider consulting with a financial expert or SAP consultant who specializes in financial accounting and consolidation processes.
  
  
  Related Information:
  
  Goodwill Impairment: Understand the process of goodwill impairment testing, which involves comparing the carrying amount of goodwill to its recoverable amount.
  SAP Notes: Check for any relevant SAP Notes that may address this error or provide additional guidance on handling goodwill in your specific SAP environment.
  Training and Resources: Consider training sessions or resources on SAP financial accounting and consolidation to better understand how to manage goodwill and related transactions.
  
  By following these steps, you should be able to address the UCF6854 error and ensure compliance with accounting standards regarding goodwill.