Creating and Configuring the Equity Elimination
Last updated on 2025-07-09
Overview
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 theequity elimination or individually.
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 consolidated investments (all available options)
- Amortization of goodwill and straight-line reversal of negative consolidation differences
- Attribution of profit or loss and currency translation differences to non-controlling interests
- Consolidation of corporate actions
- Migration from the legacy app for equity elimination of Lucanet.Financial Client
The following functions are not supported by the app for equity elimination in the CFO Solution Platform:
- Deconsolidation of proportionately consolidated investments (all available options)
- Changes in ownership interests without loss of control
- Intercompany transfer of investments
- Measurement according to the equity method including changes of the consolidation method to and from the equity method
- Measurement of shares before consolidation according to the equity method
- Changes in the consolidation method between full and proportionate consolidation
- Deconsolidation with a remaining interest in the investment
- Posting comments within the equity elimination postings
The functions listed here will gradually be available in future app versions.
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.
This article contains the following sections:
Configuring the Equity Elimination
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:
Option
Description
Scope of functions
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.
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 Next Generation, 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.
Consolidation methods
Consolidation method to be applied
Please note that in the current version, the app's business logic only supports full and/or proportionate consolidation. The equity method will be available in a future version of the app.
Accounting standards
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 area and/or consolidation unit
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 selectioncheck 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 Closed , 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.
Option
Description
Basis
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.
Target
Adjustment level for consolidation postings to be used for postings
Proportioning
Adjustment level for the proportioning
The adjustment level must be contained in the adjustment level group selected under Basis.
Consolidated financial statements
Adjustment level group that contains all adjustment levels of the adjustment level group Basis and the adjustment level Target.
Account for rounding differences
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.
Option
Description
Shares and investments
The balance accounts or items for shares and investments to be included in the equity elimination
Equity
Equity accounts or items to be included in the equity elimination. All accounts and items must belong to the same transaction type category.
Configure consolidation of corporate actions
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 Next Generation, additional configuration of the corporate actions in the Master data administration is not required.
Change of ownership interests without loss of control
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.
Change of ownership interests with loss of control
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.
Option
Description
Goodwill
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.
Negative consolidation difference
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.
Currency translation of differential
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.
Allocation of indirect differential
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:
- As goodwill/negative consolidation difference from consolidation
- As 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.
Option
Description
Recognize 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
Attribution of income to non-controlling interests
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
The app calculates the profit and loss to be reclassified for each period based on the values available for that combination of account or item, and transaction type.
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
- 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
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 :
- 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.