What is elimination of investment income in SAP FI-LC - Consolidation?

SAP Term: elimination of investment income

• Component: FI-LC

• Component Name: Consolidation

• Description: The elimination of dividends received by an investor company against the dividends distributed by its investee company. If a profit transfer agreement is in place, this term implies the elimination of revenue and expense incurred by the transfer of profit.

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• Key Concepts: 
  Elimination of investment income is a process used in SAP FI-LC Consolidation to remove the effects of intercompany investments from the consolidated financial statements. This process is used to ensure that the consolidated financial statements accurately reflect the financial position of the group as a whole, rather than the individual companies. 
  
  How to use it: 
  In SAP FI-LC Consolidation, elimination of investment income is done by creating an elimination entry in the consolidation system. This entry will be used to offset any intercompany investments that have been made between companies in the group. The elimination entry will be based on the amount of investment income that has been earned by each company in the group. 
  
  Tips & Tricks: 
  When creating an elimination entry for investment income, it is important to ensure that all intercompany investments are taken into account. This includes any investments that have been made between companies in different countries or currencies. It is also important to ensure that all relevant exchange rates are taken into account when calculating the amount of investment income to be eliminated. 
  
  Related Information: 
  Elimination of investment income is just one of many processes used in SAP FI-LC Consolidation. Other processes include elimination of intercompany profits and losses, elimination of intercompany transactions, and consolidation adjustments. It is important to understand how these processes work together in order to ensure accurate and reliable consolidated financial statements.