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

SAP Term: consolidation of investments method

• Component: FI-LC

• Component Name: Consolidation

• Description: The application supports the following consolidation of investments methods: Purchase method Pooling of interest Proportional consolidation Equity method The following consolidation variants are available: Book value method Revaluation method Proportion of equity method Each case offers various options for the treatment of hidden reserves fair value adjustments and goodwill. Goodwill can be capitalized and amortized, or be eliminated directly against the appropriations.

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• Key Concepts: 
  The consolidation of investments method is a feature of the SAP Financial Accounting (FI-LC) Consolidation component. It allows companies to consolidate their investments in subsidiaries and other entities into a single financial statement. This method is used to accurately reflect the financial position of the parent company and its subsidiaries. 
  
  How to use it: 
  The consolidation of investments method is used to combine the financial statements of multiple entities into one consolidated statement. This is done by taking the net assets of each entity and combining them into one total figure. The consolidated statement will then reflect the total assets, liabilities, and equity of the parent company and its subsidiaries. 
  
  Tips & Tricks: 
  When using the consolidation of investments method, it is important to ensure that all entities are using the same accounting standards and methods. This will ensure that the consolidated statement accurately reflects the financial position of the parent company and its subsidiaries. Additionally, it is important to ensure that all entities are up-to-date with their financial reporting so that the consolidated statement is accurate. 
  
  Related Information: 
  The consolidation of investments method is closely related to other features of SAP Financial Accounting (FI-LC) Consolidation such as currency translation, intercompany eliminations, and minority interest calculations. Additionally, this method can be used in conjunction with other features such as cost allocation and profit/loss allocation.