What is mutual stock method in SAP EC-CS - Consolidation?

SAP Term: mutual stock method

• Component: EC-CS

• Component Name: Consolidation

• Description: An accounting technique in the consolidation of investments that is typically used in managment consolidation in the following situation: A consolidation unit a is fully consolidated in the top consolidation group in a hierarchy of consolidation groups, and b at the same time belongs to lower-level consolidation groups. The unit is consolidated in one of the lower-level groups using the purchase method, and is consolidated in all other groups using the mutual stock method. The mutual stock method complements the purchase method. This means that the documents posted in the lower-level group that uses the purchase method merely need to be added to the documents posted in the groups that use the mutual stock method. In management consolidation, the mutual stock method is an alternative to the equity method.

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• Key Concepts: 
  The mutual stock method is a consolidation method used in SAP EC-CS Consolidation. It is used to calculate the equity of a consolidated company by taking into account the equity of the parent company and the equity of the subsidiary companies. This method is based on the assumption that the parent company and the subsidiary companies have the same stock value. 
  
  How to use it: 
  In order to use the mutual stock method, you must first set up a consolidation group in SAP EC-CS Consolidation. Once this is done, you can then enter the equity of each company in the group into the system. The system will then calculate the consolidated equity based on the mutual stock method. 
  
  Tips & Tricks: 
  When using the mutual stock method, it is important to ensure that all of the companies in the consolidation group have accurate and up-to-date equity values. This will ensure that the consolidated equity calculation is accurate. 
  
  Related Information: 
  The mutual stock method is one of several consolidation methods available in SAP EC-CS Consolidation. Other methods include the proportional consolidation method and the full consolidation method.