The merging of data of a corporate group to form consolidated financial statements. The consolidation system supports different types of consolidated statements to meet legal requirements for external financial reporting purposes as well as internal informational requirements.
The following types of consolidation are supported:
The creation of consolidated statements requires consolidation tasks. These include standardizing entries, currency translation, reclassifications, interunit elimination, elimination of interunit (IU) profit and loss, and consolidation of investments. The consolidation system provides automated posting processes for these tasks.
This is an accounting procedure whereby the financial operating results of the companies within the group are combined to create overall results for the group in accordance with the entity theory.
According to the entity theory, the consolidated financial statements must portray the assets, the financial and income position of the group, as if all of the companies were a single corporation.
To accomplish this, all transfers of assets, services as well as all financial relationships between the consolidated companies that affect the consolidated financial statement must be eliminated.
The consolidation activities include the following steps:
In FI-LC, these steps are represented by their corresponding consolidation entries; these are divided into eliminating entries and subgroup-dependent consolidation entries.