What is investment amortization in SAP FI-LC - Consolidation?

SAP Term: investment amortization

• Component: FI-LC

• Component Name: Consolidation

• Description: The activity of decreasing the investment of at least one immediate parent company without affecting the investment share or the equity of the investee company. A simultaneous reduction of the investment share is referred to as a divestiture, and a simultaneous reduction in equity is referred to as a reduction in capitalization.

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• Key Concepts: 
  Investment amortization is a process used in SAP FI-LC Consolidation to spread the cost of an investment over its useful life. This process is used to calculate the amount of depreciation that should be charged against an asset each year. It is also used to calculate the amount of interest that should be charged against a loan or other financial instrument. 
  
  How to use it: 
  In SAP FI-LC Consolidation, investment amortization is used to calculate the amount of depreciation and interest that should be charged against an asset or loan each year. The user can enter the initial cost of the asset or loan, the useful life of the asset or loan, and any other relevant information into the system. The system will then calculate the amount of depreciation and interest that should be charged each year. 
  
  Tips & Tricks: 
  When entering information into SAP FI-LC Consolidation for investment amortization, it is important to ensure that all relevant information is entered accurately. This will ensure that the system calculates the correct amount of depreciation and interest each year. 
  
  Related Information: 
  Investment amortization is closely related to other accounting processes such as depreciation and amortization. It is important to understand these processes in order to properly use investment amortization in SAP FI-LC Consolidation.