What is reduction in capitalization in SAP EC-CS - Consolidation?

SAP Term: reduction in capitalization

• Component: EC-CS

• Component Name: Consolidation

• Description: activity that reduces the capital stock of an investee unit and simultaneously reduces the investment book value equity in earnings of affiliates of the immediate investor units, without affecting the respective percentages of each investment share.

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• Key Concepts: 
  Reduction in capitalization is a process in the SAP EC-CS Consolidation component that allows companies to reduce the amount of capital they have invested in a subsidiary. This is done by reducing the amount of equity that the parent company has in the subsidiary. The reduction in capitalization can be done either through a cash payment or through a write-off of the subsidiary's assets. 
  
  How to use it: 
  In order to use the reduction in capitalization process, companies must first enter the details of the transaction into the SAP EC-CS Consolidation component. This includes entering the amount of capital to be reduced, as well as any other relevant information such as the date of the transaction and any other notes. Once this information is entered, the system will automatically calculate the reduction in capitalization and update the accounts accordingly. 
  
  Tips & Tricks: 
  When using reduction in capitalization, it is important to ensure that all relevant information is entered accurately into the system. This includes ensuring that all amounts are entered correctly and that any notes are included. Additionally, it is important to ensure that all transactions are properly documented and that any changes are tracked and reported on. 
  
  Related Information: 
  Reduction in capitalization is just one of many processes available within SAP EC-CS Consolidation. Other processes include consolidation, elimination, and revaluation. Additionally, there are various reports available within SAP EC-CS Consolidation which can be used to track and analyze changes in capitalization over time.