What is cost method in SAP EC-CS - Consolidation?

SAP Term: cost method

• Component: EC-CS

• Component Name: Consolidation

• Description: Accounting technique of consolidation of investments in which changes in the investee unit's balance sheet and income statement have no effect on the investment book value of the parent unit. &EXAMPLE& Dividends paid by the investee unit do not reduce the parent's investee book value. Instead, the parent records the investee unit's distributions as investment income in the parent's income statement.

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• Key Concepts: 
  The cost method in SAP EC-CS Consolidation is a way of calculating the cost of a consolidated entity. It is based on the principle that the cost of a consolidated entity should be equal to the sum of the costs of its individual components. This method is used to calculate the cost of a consolidated entity when there are multiple components with different costs. 
  
  How to use it: 
  The cost method in SAP EC-CS Consolidation is used to calculate the cost of a consolidated entity. To use this method, you must first identify all the components that make up the consolidated entity. Then, you must calculate the cost of each component and add them together to get the total cost of the consolidated entity. 
  
  Tips & Tricks: 
  When using the cost method in SAP EC-CS Consolidation, it is important to ensure that all components are accurately identified and their costs are correctly calculated. This will ensure that the total cost of the consolidated entity is accurate. Additionally, it is important to keep track of any changes in costs over time, as this can affect the total cost of the consolidated entity. 
  
  Related Information: 
  The cost method in SAP EC-CS Consolidation is related to other methods such as market value and fair value methods. These methods are used to calculate the value of a consolidated entity based on different principles. Additionally, there are other methods such as equity method and proportional consolidation which can be used to calculate the value of a consolidated entity.