What is book value method in SAP FI-LC - Consolidation?

SAP Term: book value method

• Component: FI-LC

• Component Name: Consolidation

• Description: A variant of consolidation of investments. When the book value method is applied to the proportional or purchase methods of consolidation, the method eliminates hidden reserves fair value adjustments only up to the value that pertains to the corporate group. The alternative to the book value method is the revaluation method. When the book value method is applied to the equity method of consolidation, the investment item of the immediate parent company remains unchanged during first consolidation. Typically, the differential is then stated in the notes to the financial statements.

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• Key Concepts: 
  The book value method is a consolidation method used in the FI-LC Consolidation component of SAP. It is used to calculate the consolidated value of a group of companies by taking the sum of the book values of each company. This method is based on the assumption that the book values of each company are an accurate representation of their true value. 
  
  How to use it: 
  The book value method can be used in SAP by accessing the FI-LC Consolidation component. Once in the component, select the “Book Value Method” option and enter the book values for each company in the group. The consolidated value will then be calculated automatically. 
  
  Tips & Tricks: 
  When using the book value method, it is important to ensure that all book values are up-to-date and accurate. This will ensure that the consolidated value is as accurate as possible. 
  
  Related Information: 
  The book value method is just one of many consolidation methods available in SAP. Other methods include the equity method, proportional consolidation, and full consolidation. Each method has its own advantages and disadvantages, so it is important to choose the right one for your needs.