What is pooling of interests in SAP EC-CS - Consolidation?

SAP Term: pooling of interests

• Component: EC-CS

• Component Name: Consolidation

• Description: An accounting technique that is used when the parent's influence in the consolidation unit is even greater than that in the purchase method of consolidation. For instance, the German commercial code HGB requires this method when the investment share lies between 90% and 100% and the purchase was made by an exchange of stock. The pooling-of-interest method does not deviate from the purchase method when it is employed for the elimination of intercompany payables and receivables, revenue and expense, and profit and loss. In the consolidation of investments, only capital stock is relevant. The differential incurred during the elimination of the investment is always cleared against the retained earnings appropriations, without affecting net income.

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• Key Concepts: 
  Pooling of interests is an accounting method used in the EC-CS Consolidation component of SAP. It is a method of combining two or more companies into one entity, where the assets and liabilities of each company are combined and reported as one. This method is used when two companies merge or when one company acquires another. 
  
  How to use it: 
  In SAP, pooling of interests is used to combine the financial statements of two or more companies into one. This is done by creating a new company in the EC-CS Consolidation component and then assigning the assets and liabilities of each company to the new company. The new company will then be responsible for all the assets and liabilities of the merged companies. 
  
  Tips & Tricks: 
  When using pooling of interests in SAP, it is important to ensure that all assets and liabilities are accurately assigned to the new company. This will ensure that all financial statements are accurate and up-to-date. Additionally, it is important to ensure that all transactions are properly recorded in order to maintain accurate records. 
  
  Related Information: 
  Pooling of interests is a commonly used accounting method in SAP, but it is not the only one. Other methods such as purchase accounting and equity accounting can also be used in SAP for consolidation purposes. Additionally, there are other components within SAP that can be used for consolidation purposes such as Financial Consolidation and Management Consolidation.