Equity Elimination | Lucanet Knowledge Base

Getting Started

Global Functions

Administration

Extended Planning & Analysis (xP&A)

Consolidation & Financial Planning

User Interface of Lucanet Consolidation & Financial Planning

General Functions

Basic Configuration

Dashboards

Reporting & Analyzing

Import and Journals

Planning

Consolidation

Consolidation 1

Consolidation 2

All Steps at a Glance

Basic Elements

Defining the Group Structure

Administrating Master Data

Creating Consolidated Financial Statements

Creating and Configuring Data Transfer and Proportioning

Creating and Configuring Consolidation Apps

Debit/Credit Shifts in Consolidation Areas

Elimination of Income from Investments

Elimination of Intercompany Income and Expense

Elimination of Intercompany Debt

Equity Elimination

Reclassification of profit or loss from previous year in consolidation areas

Elimination of Intercompany Profit or Loss in Current Assets

Notes on Migration from Lucanet.Financial Client

Adjust and Reclassify Values in Consolidation Areas

Executing the Consolidation

Dimensions

Excel-Integration

Workspace Configuration

ESG Reporting

Disclosure Management

XBRL Tagger

Lease Accounting

Banking & Cash Management

Data Collection

Tax Compliance & Reporting

Glossary

Using the App for the equity elimination, the cross-ownerships between group companies are eliminated for the specified period to prepare consolidated financial statements. Values resulting during this process are posted to the accounts that were selected for equity elimination.

The app for equity elimination supports the inclusion of fully and proportionally consolidated subsidiaries in the consolidated financial statements. In addition to the elimination of the cross-ownerships between the group companies, the app can be used to automatically perform a proportional reclassification for the correct recognition of non-controlling interests. Reclassification can be performed either together with the equity elimination or individually.

In addition, the app for equity elimination can be used for the measurement of associated companies using the equity method.

The business logic of the app for equity elimination is based on different consolidation options. The options may be applied either in accordance with the predefined configuration for the accounting standards HGB (German Commercial Code), IFRS or US GAAP, or according to an individual configuration.

Information regarding range of functions

The following functions are currently supported by the app for equity elimination in the CFO Solution Platform:

Initial consolidation of fully and proportionately consolidated investments (all available options)

Deconsolidation of fully and proportionately consolidated investments in case of full sale of shares

Changes in ownership interests for fully consolidated investments without loss of control

IC transfers for fully consolidated investments without changes in the effective group share

Amortization of goodwill and straight-line reversal of negative consolidation differences

Attribution of profit or loss and currency translation differences to non-controlling interests

Measurement of associated companies using the equity method

Consolidation of corporate actions for fully and proportinately consolidated investments

Migration from the legacy app for equity elimination in Lucanet.Financial Client

The following functions are not supported by the app for equity elimination in the CFO Solution Platform:

Deconsolidation of fully and proportionately consolidated investments as well as disposal of associated companies with a remaining interest in the investment

Changes in ownership interests for proportionately consolidated investments without loss of control, and for associated companies without loss of significant influence

IC transfers for fully consolidated investments with changes in the effective group share

IC transfers for proportionately consolidated investments and associated companies

Offsetting negative equity carrying amounts when applying the equity method

Changes in the consolidation method to and from the equity method

Measurement of shares before consolidation using the equity method

Consolidation of corporate actions when applying the equity method

Changes in the consolidation method between full and proportionate consolidation

Posting comments within the equity elimination postings

Please note that some of the functions which are currently not supported will be introduced gradually in future app versions. We will keep you informed about enhancements to the range of functions in the relevant What’s New communications.

Customers currently using the Financial Client are advised to postpone migration to the next Generation app, until all features relevant to their business needs have been released.

The legacy equity elimination app in Financial Client will be usable until all features are available in the CFO solution platform.

To configure the app for equity elimination, click the app in the structure view and click Edit in the displayed dialog.

Then configure the steps as described below.

Specify general configurations for the equity elimination in the Settings step:

Shows the 'Settings' step — 'Settings’ step

Choose between the full range of functions of the app (Capital consolidation and reclassification to non-controlling interests) or whether you only want to reclassify to non-controlling interests.

If you select the full range of functions, you can also perform a measurement according to the equity method. When this option is activated, the Equity method step is shown.

This option is only relevant if you have previously used the (legacy) equity elimination of Consolidation 2 in Lucanet.Financial Client and now want to switch to the equity elimination in the CFO Solution Platform for the first time.

If this applies, we recommend automatic migration to ensure a correct basis for the business logic of the equity elimination in the CFO Solution Platform. Otherwise, you may need to reclassify balances manually. In this case, correct disclosure of the balances of the differences and non-controlling interests in the equity elimination cannot be guaranteed.

If you want to perform the automatic migration to the app for equity elimination on the CFO Solution Platform, the following options are available to you here:

Reclassify goodwill and negative consolidation differences

Activate the check box to reclassify the goodwill and negative consolidation differences to the dimension elements and accounts required by the business logic of the equity elimination in the Lucanet CFO Solution Platform.

This option should always be activated if the legacy app was already used.

This option is only available if the scope of functions

Equity elimination and reclassification to non-controlling interests

is selected.

In the app for the equity elimination in the CFO Solution Platform, the recognition of goodwill and negative consolidation differences at the investor level and the distribution of these values by investors using the partner dimension is no longer supported. This change corresponds to standard GAAP interpretations which stipulate that goodwill must be assigned to certain business units and not on the basis of ownership interests..

Merge balances of non-controlling interests posted by origin account If you have presented the non-controlling interests by origin account in the previous version of the app, you need to activate this checkbox to reclassify the balances of the non-controlling interests to the default account for non-controlling interests:.

This option is always available regardless of the selectedscope of functions.

Accounting standard to be applied:

IFRS

DRS/HGB (German accounting principles)

US GAAP

Individual

according to user-defined criteria within the scope of the option

This setting affects which app configurations are possible in the following.

Consolidation areasand/or units of the selected group the consolidation is to be performed for

By default, all consolidation areas and units within the group are included in the consolidation.

If you only want to include certain consolidation groups and units in the consolidation, activate the Individual selection check box and select one of the following options:

Individual

In the table, select individual consolidation areas and/or consolidation units to be considered in the consolidation.

Exclude

In the table, select the consolidation areas and/or consolidation units that are to be excluded from consolidation.

If you choose Individual or Exclude, the app will perform no eliminations for intercompany transactions of the excluded consolidation units.

In the Adjustment Levels step, please enter the adjustment levels for the elimination and an account for any rounding differences that may arise.

Shows the 'Adjustment levels' step — 'Adjustment levels’ step

Adjustment level group containing all adjustment levels for data imports and adjustment postings which need to be considered during consolidation.

Please ensure that this adjustment level group contains the adjustment level for proportioning.

Adjustment level for consolidation postings to be used for postings

Adjustment level for the proportioning

The adjustment level must be contained in the adjustment level group selected under Basis.

Adjustment level group that contains all adjustment levels of the adjustment level group Basis and the adjustment level Target.

Account to which rounding differences are posted

In the Equity elimination step, enter the details for the equity elimination.

Please note that the options available in this step depend on the accounting standard you selected in the Settings step. All options that are not relevant are grayed out.

Shows the 'Equity elimination' step — 'Equity elimination’ step

The balance account(s) or item(s) for shares and investments to be included in the equity elimination. All accounts and items must belong to the same transaction type category.

Transaction types to be used for additions to and disposals from historical costs.

These transaction types will be used in the context of IC share acquisitions and equity method measurements.

The transaction types selected for historical cost must belong to the same transaction type category as the accounts and/or items selected for shares and investments.

Equity accounts or items to be included in the equity elimination. All accounts and items must belong to the same transaction type category.

Activate the option to include corporate actions in the consolidation process for fully consolidated subsidiaries.

If you activate the option, additionally choose the transaction types for capital increase and capital reduction as well as a P&L account to which the difference from corporate action is to be posted.

The selected transaction types for the corporate actions must belong to the same transaction type category as the selected accounts and/or items for equity.

When using the app for Equity elimination on the CFO Solution Platform, additional configuration of the corporate actions in the Master data administration is not required.

Under Recognize differentials, specify how differences from changes to the ownership interests without loss of control should be recognized. Depending on the underlying accounting standard, you have the following options:

As goodwill or gain or loss from deconsolidation

With this option, differentials will be recognized as goodwill or negative goodwill in the event of an increase in ownership interest or as gain or loss from deconsolidation in the event of a reduction in ownership interest.

In equity

With this option, differentials are recognized in retained earnings under equity, regardless of whether there is an increase or decrease in ownership interest.

When choosing the option

In equity

, please specify an account to which the

Retained earnings

are to be posted.

Select the profit and loss account for the recognition of the gain or loss from deconsolidation.

This account is required during the consolidation process if an investorloses control of a previously fully- or proportionally consolidated subsidiary due to a reduction in the ownership interest.

The current version of the app only supports a loss of control for fully consolidated subsidiaries when no shares remain. Partial sale of shares or changes to proportionally consolidated subsidiaries are currently not supported.

Please check the postings as adjustments may be required!

In the Differential step, enter the details for the equity elimination.

Please note that the options available in this step depend on the accounting standard you selected in the Settings step. All options that are not relevant are grayed out.

Shows the 'Differential' step — ‘Differential’ step

Balance sheet item under which accounts for goodwill are to be created.

If necessary, activate the option Amortize goodwill on a straight-line basis, and also select a transaction type that is to be used for the amortization postings.

Specify how negative consolidation differences are to be recognized.

Recognize in the P&L

Activate this option to recognize negative consolidation differences in the profit and loss statement and select the corresponding target account to be used by the app.

Recognize in the balance sheet

Activate this option to recognize negative consolidation differences in the balance sheet and select the target balance sheet item under which the account(s) for negative consolidation differences are to be created.

Reverse negative consolidation difference on a straight-line basis

When recoginition in the balance sheet is chosen, activate this option if negative consolidation differences are to be reversed and select a transaction type to be used for the postings.

If for subsidiary included in the scope of execution of the app the Full Goodwill Method has been activated, the option Recognize in the P&L must be chosen.

If a proportionally consolidated subsidiary is included in the scope of execution of the app, the option Recognize in the balance sheet must be chosen.

These restrictions are necessary to ensure that the created equity elimination postings are in accordance with the underlying accounting standards.

Specify whether the differential from equity elimination is to be presented in the currency of the consolidation area or in the currency of the consolidation unit.

If the presentation in the currency of the consolidation unit is chosen, you should also select the balance sheet item under which the technical account(s) for the reclassification of the differentials are to be created or have already been created with the correct attributes.

Specify whether the differential attributable to indirect non-controlling interests is to be recognized.

Specify how differentials relating to indirect non-controlling interests that arise during the initial consolidation of subsidiaries or the consolidation of an increase in shares in subsidiaries is to be recognized.

The following options are available depending on the underlying accounting standard:

goodwill/negative consolidation difference

from consolidation

non-controlling interests in equity

For full consolidation using the full goodwill method and for proportionally consolidated subsidiaries, the differential is always recognized as goodwill/negative consolidation difference irrespective of the option actually selected for indirect non-controlling interests.

In the Non-controlling interests step, specify the details for the treatment of the non-controlling interests.

Non-controlling interests

Balance sheet item under which the account or accounts for non-controlling interests are to be created or have already been created with the correct attributes

Changes in non-controlling interests

Transaction type to be used for recognizing changes in non-controlling interests following increases or decreases in ownership interests without loss of control

Net income/loss in equity

Balance sheet item or account to be used as the basis for reclassification of the net income/lossto non-controlling interests

Transaction type Transaction type to be used as a basis for the reclassification of the net income/loss to non-controlling interests

If this applies, we recommend **automatic migration** to ensure a correct basis for the business logic of the equity elimination in the CFO Solution Platform. Otherwise, you may need to reclassify balances manually. In this case, correct disclosure of the balances of the differences and non-controlling interests in the equity elimination cannot be guaranteed. 1

Profit or loss attributable to non-controlling interests

Target account in the P&L for posting the reclassification of the net income/loss to non-controlling interests

Attribution of currency translation differences to non-controlling interests

Accounts or items whose values are to be used as a calculation basis for the continuous attribution of the currency translation differences to non-controlling interests

Equity method

In the Equity method step, specify the accounts/items and transaction types to be taken into account when measuring under the equity method.

Note: The Equity method step is only visible if you have enabled the option Measurement under the equity method in the Settings step.

Shows the 'Equity method' step of the app for equity elimination — 'Equity method' step

Specify the following for the Recognition and initial measurement according to the equity method:

Reconciliation between opening and closing carrying amounts of the investment

For the Reconciliation between opening and closing carrying amounts of the investment, select a subledger item with period type Balance with carry forward from previous period under which accounts used for the measurement of associates according to the equity method should be created.

Notes:

This separate calculation will serve as the basis for the continuous reconciliation between the opening and closing carrying amounts of investments in associates.

Please ensure that the account for investments in associates is configured as transfer account for the subledger the selected item belongs to.

In addition, the options

Subledger accounts with the same transaction type category as the transfer account use the transaction type of the posting instead of the default transaction type

and

Include partner dimension in the transfer

must be activated within the subledger.

Carrying amount increases

Select the transaction type to be used to recognize increases in carrying amounts of investments in associates.

Please note that the selected transaction type must belong to the same transaction type category as the item chosen for the reconciliation between the opening and carrying amounts.

Carrying amount decreases

Select the transaction type to be used to recognize decreases in carrying amounts of investments in associates.

Please note that the selected transaction type must belong to the same transaction type category as the item chosen for the reconciliation between the opening and carrying amounts.

Configure allocation of differential to hidden reserves and liabilities

Activate the option to allocate a difference arising from initial measurement of an associate according to the equity method to the included proportionate hidden reserves and liabilities as well as to the remaining proportionate goodwill or negative consolidation difference.

If the option is activated, select the balance sheet item or account used for the disclosure of the revaluation surplus. This item or account will serve as the basis for the differential allocation to hidden reserves and liabilities.

Option

Beschreibung

Net income/loss in equity

Review the selected base account and transaction type within the Non-controlling interests step for the continuous attribution of income to non-controlling interests.

This account and transaction type will serve as a basis for the subsequent measurement of associates according to the equity method as well. The app will calculate the share of the associate's profit and loss in each period based on the values found on this combination of account and transaction type.

Choose the target P&L account to be used by the app to present the share of the income or loss from associates in a separate line item in the consolidated statement of profit or loss.

Please note that the differentiation between the share of the associate's income and loss is solely used to recognize the net result below the correct line item in the profit or loss statement. However, these accounts are not used for a separate disclosure of the associate's income and losses as this is not required by the legislation.

Currency translation differences

Review the selected base accounts and items within the Non-controlling interests step for the continuous attribution of currency translation differences to non-controlling interests.

These accounts and items will serve as the basis for the subsequent measurement of associates according to the equity method as well.

Activate the option to recognize the share of the associate’s other comprehensive income separately.

If this option is activated , select the balance sheet item or account and the transaction type to be used as the basis for calculating the proportionate other comprehensive income within the subsequent measurement of an associate according to the equity method.

The app will calculate the share of the associate's other comprehensive income in each period based on the values found on this combination of account/item and transaction type.

Please note that the availability of the option depends on the previously selected accounting standard.

Option

Beschreibung

Gain or loss from disposal of associates

Select the account to be used by the app for changes in ownership interests with loss of significant influence to recognize the gain or loss from disposal of associates.

Accumulated D&A disposal

Select the transaction type for disposal of accumulated depreciation and amortization on the equity carrying amount.

Specify the following for the Subsequent measurement according to the equity method:

Specify the following for the Changes in ownership interests with loss of significant influence:

Please note: The current version of the app only supports loss of significant influence in associates measured according to the equity method if no shares remain. Partial sales of shares are not supported yet. Please review the postings as adjustments might be needed.

As long as a step has not been fully configured and/or configuration errors exist, it is displayed with a red exclamation mark

Once a step is configured completely and without any errors, it is displayed with a green check mark

You can close the configuration dialog by clicking the arrow icon

at the top left.

To change the name of the app, select the app in the tree view and choose

Properties

from the context menu.

Executing the Equity Elimination

You can execute the app for equity elimination either separately, together with other apps in an executable folder or as part of consolidated financial statements.

How to proceed in each case is described under Executing the Consolidation.

Displaying and Deleting Created elements

On the Created elements tab, the postings that were created during the app execution are shown.

The table provides the following information:

Type

of the element

Path

under which the element was created When you click on the link, you are taken directly to the posting in the relevant

journal

Date of the

last execution

that created the element

Shows the 'Created elements' tab of a Consolidation app — Tab 'Created elements'

If necessary, you can delete all elements.

Note: Once all elements have been deleted, the state of the app is Not executed again.

Displaying the App Properties

The App properties are displayed on the tab of the same name:

Shows the 'Properties' tab of a consolidation app — 'Properties' tab

The following App properties are displayed:

Type

of the element

Function of the

App

Version

of the element.

New available version

As soon as a new version of the app is available that contains changes to the app configuration and/or the calculation logic of the app, the Refresh command is displayed, allowing you to update the app to the latest version.

Information about the changes to each version can be found in the Release Notes, which can be accessed via the link of the same name.

We strongly recommend to update all apps to the new version as soon as possible because it cannot be guaranteed how long an app with an obsolete version can be executed.

Last updated on May 28, 2026

Creating and Configuring the Equity Elimination

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Configuring the Equity Elimination

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