What is consolidation method in SAP FI-LC - Consolidation?

SAP Term: consolidation method

• Component: FI-LC

• Component Name: Consolidation

• Description: The system supports the following consolidation methods: Purchase method Proportional consolidation Equity method Pooling of interests method Mutual stock method Cost method

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• Key Concepts: 
  The consolidation method is a feature of the FI-LC Consolidation component of SAP. It allows users to combine financial data from multiple companies into a single set of consolidated financial statements. This is done by eliminating intercompany transactions and eliminating the effects of currency differences. The consolidation method also allows users to adjust for differences in accounting principles between companies. 
  
  How to use it: 
  The consolidation method can be used to create consolidated financial statements for a group of companies. To do this, users must first define the consolidation rules, which specify how the data should be combined and adjusted. Once the rules are defined, the data from each company can be loaded into the system and the consolidation process can begin. The system will then automatically combine and adjust the data according to the rules that were defined. 
  
  Tips & Tricks: 
  When setting up the consolidation rules, it is important to make sure that all of the companies involved in the consolidation are using the same accounting principles. This will ensure that the data is accurately combined and adjusted. Additionally, it is important to make sure that all of the data is loaded into the system correctly before beginning the consolidation process. 
  
  Related Information: 
  The FI-LC Consolidation component also includes features such as currency translation, elimination of intercompany transactions, and reporting capabilities. Additionally, it can be used in conjunction with other components such as FI-GL and CO-PA to provide a comprehensive view of a company’s financial performance.