What is periodic reduction of goodwill in SAP (EC-CS - Consolidation)?

SAP Term: periodic reduction of goodwill

• Component: EC-CS

• Component Name: Consolidation

• Description: A variant for treating goodwill in which calculated goodwill is capitalized and then successively cleared with a stockholders' equity item for example, retained earnings appropriations without being charged off as an expense.

Smart SAP Assistant

• Key Concepts: 
  Periodic reduction of goodwill is a process used in the EC-CS Consolidation component of SAP. It is used to reduce the value of goodwill on the balance sheet of a company over a period of time. This process is used to ensure that the value of goodwill is not overstated and that it reflects the current market value of the company. 
  
  How to use it: 
  In order to use periodic reduction of goodwill, the user must first enter the amount of goodwill that needs to be reduced. This can be done by entering the amount in the “Goodwill Reduction” field in the EC-CS Consolidation component. Once this is done, the user can then select a period for which the reduction should take place. This can be done by selecting a period from the “Period” dropdown menu. 
  
  Tips & Tricks: 
  It is important to remember that periodic reduction of goodwill should only be used when necessary. If there is no need to reduce the value of goodwill, then it should not be done. Additionally, it is important to ensure that the amount entered for reduction is accurate and reflects the current market value of the company. 
  
  Related Information: 
  For more information on periodic reduction of goodwill, please refer to SAP’s documentation on EC-CS Consolidation. Additionally, there are many online resources available that provide further information on this topic.