Defining Equitization Rules

This section provides an overview of equitization and discusses how to:

Establish equitization rules for processing equitization.
Establish non-controlling interest only equitization rules.
Establish dividend reclassification equitization rules.
Establish source elimination equitization rules.
Establish equitization rule sets.
Establish equitization groups.

Pages Used to Define Equitization Rules

Page Name	Definition Name	Navigation	Usage
Equitization Rule	GC_EQTZ_RULE	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule	Establish an equitization rule.
Equitization Rule - Source	GC_EQTZ_SOURCE	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Source	Specify the source ChartField values to equitize.
Equitization Rule - Target	GC_EQTZ_TARGET	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Target	Specify the target accounts for equitization.
Equitization Rule - Non-Controlling Interest	GC_EQTZ_MIN_INT	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Non-Controlling Interest	Specify the accounts to offset earnings attributed to non-controlling interest.
Equitization Rule - Subsidiary Offset	GC_EQTZ_OFFSET	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Subsidiary Offset	Specify the accounts to offset the total equitized source amount.
Equitization Rule - Dividend Reclassification	GC_EQTZ_DIV	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Dividend Reclassification	Specify the source and target accounts for a dividend reclassification equitization rule. This page is only available when the equitization rule processing option is set to `Dividend Reclassification`
Equitization Rule - Notes	GC_EQTZ_RULE_NOTES	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Notes	Enter notes about an equitization rule.
Equitization Rule Set	GC_EQTZ_SET	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule Set	Associate ownership sets with equitization rules to calculate the equitization adjustments and identify the set of equitization rules that should be used for subsidiaries.
Equitization Rule Set - Notes	GC_EQTZ_SET_NOTES	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule Set, then select Notes	Enter notes about an equitization rule set.
Equitization Group	GC_EQTZ_GROUP	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Group	Define the equitization rule sets that comprise an equitization group and the order in which to process them. Include all the equitization rule sets needed to describe every subsidiary for which the system should process equitization.
Equitization Group - Notes	GC_EQTZ_GRP_NOTES	select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Group, then select Notes	Enter notes about an equitization group.

Understanding Equitization Rules

Equitization rules post a subsidiary's net income or loss to its parent company's books, as a debit to investment and a credit to equity income. The equitization process records current period changes in a parent's investment in subsidiaries, based on the subsidiary's changes in equity. This process then creates the related elimination entries and books them to the elimination entity.

You have the option of calculating and accounting for non-controlling interest or reversing the target amounts that result from equitization; whether you need to do this depends on which accounts you're using as input into the consolidation process. If year-to-date (YTD) elimination for investment is taken care of for equitization processing, you do not want the NCI eliminations (part of processing eliminations) to generate them again; that is why the option to reverse the target amounts from equitization is provided.

Equitization rules are processed differently, depending the on the ledger template associated with the consolidation model. When the Processing Method selection on the Ledger Template-Consolidation Variables page is set to Use year-to-date data, the system uses the ownership percentage at the historic period end date for each period processed. This ensures that the equity pickup entries are based on historical ownership. If the processing method is set to Use period data, only the specified period is processed

See Defining Ledger Templates.

When a subsidiary's equity changes during the year, its parents will want to update their books to reflect those changes. This is important because it gives an accurate depiction of those parent statements on a standalone basis if these companies are reporting separately to regulatory agencies. When the organization as a whole presents its consolidated financial statements, this change in value requires elimination. The only impact that equitization should have on the consolidated reports is to show the portion of the subsidiary's change in equity for the current period or year that belongs to outside owners (non-controlling interest), if applicable.

The following example, using a trial balance format consolidation ledger, shows the results of the equitization.

The parent owns 70 percent of the subsidiary. Net income for the subsidiary is 100 USD; therefore, the parent's portion is 70 percent of this amount. The equitization process will create journals to debit 70 USD to the parent's investment account and credit 70 USD to the equity income account for this period:

Balance Sheet/Income Statement	Subsidiary	Parent
	Period 1	Period 1
Cash, receivables, and so forth	100 USD	230 USD
Investment in subsidiary		70 USD (a)

Revenues	–1,000 USD	–2,230 USD
Expenses	900 USD	2,000 USD
Equity income		–70 USD (a)

When producing consolidated financial statements, you need to eliminate your equitization entries and create non-controlling interest entries related to the equity generated by the subsidiary during the period. These are both options with the equitization process. If specified, the equitization process creates the elimination entries that "back out" the equitization entries and sends them to the proper elimination entity as indicated in the consolidation tree. It also calculates the non-controlling interest expense and liability for the subsidiary's equity for the period. This example shows these entries:

	Subsidiary	Parent	Elimination
	Period 1	Period 1	Period 1
Cash, receivables, and so forth	100 USD	230 USD
Investment in subsidiary		70 USD (a)	–70 USD (b)
Non-Controlling interest liability			–30 USD (c)
Revenues	–1,000 USD	–2,230 USD
Expenses	900 USD	2,000 USD
Equity income		–70 USD (a)	70 USD (b)
Non-Controlling interest expense			30 USD (c)

Notice that the effect of the equitization to the parent's account (b) has been removed by eliminating the equitization entry (a). The non-controlling owner's claims on the subsidiary's net income for the period has also been taken into account by increasing the non-controlling interest liability and non-controlling interest expense (c).

Equitization Threshold

When you run the equitization process, the system uses the selection in the Equitize Parent field of the Ownership Rule-Ownership Percentage page to determine whether to equitize changes in subsidiary equity for each parent-subsidiary relationship.

When the Equitize Parent field is set to Use Threshold, the equitization threshold percent is compared to the control percentage for each subsidiary and parent relationship. When the cumulative control percentage is greater than or equal to the equitization threshold percent, specified on the Ownership Rule or Ownership Group page, subsidiary equity is equitized, using the ownership percentage to determine the amount for each subsidiary and parent relationship.

When the Equitize Parent field is set to Yes, the change in equity is always equitized, regardless of the parents controlling percentage.

When the Equitize Parent field is set to No, the change in subsidiary equity is not equitized to the direct parent, however it will be equitized to any indirect parent where the threshold is met, unless the Equitize Parent field is set to No for that parent as well.

The equitization threshold percentage can be specified on both the Ownership Group page and the Ownership Rule page. The threshold value that you enter on the Ownership Group page applies to all entities within the scenario. You can override this value at the parent level on the Ownership Rule page, by completing the Threshold Percent and Specify Threshold fields on the Ownership Rule page. .

See Ownership Rule Page.

See Ownership Group Page.

Equitization Method

The method by which you account for changes in subsidiary equity varies depending on the control percentage of the parent. This table outlines the general guidelines that apply:

Parent Control Percentage	Method	Description
Less than 20 percent	Cash	Initial purchase of portion of the subsidiary is recorded as investments in subsidiary (asset). Dividends from the subsidiary are recorded as cash received (income). In this situation, the subsidiary data is probably not loaded into the consolidation ledger (CLED).
From 20 percent through 49 percent	Equity	Initial purchase of portion of subsidiary recorded as investment in subsidiary (asset). The investment in subsidiary changes as the subsidiary records change in equity (income). In this situation, the subsidiary balances probably would be loaded into the CLED to facilitate equitization. However, you most likely would not consolidate—unless there are other parents in the organization that bring in enough additional control of the subsidiary to force consolidation.
50 percent or greater	Consolidate	The subsidiary's balances are loaded into the consolidation ledger. Need to define equitization rule to compute and record any non-controlling interest liability for the investment in subsidiary. To view the parent as a stand alone entity, you might choose to equitize, but then define the rule so that you eliminate the equitization afterwards.

Parent Control Percentage

Method

Description

Less than 20 percent

Cash

Initial purchase of portion of the subsidiary is recorded as investments in subsidiary (asset).

Dividends from the subsidiary are recorded as cash received (income).

In this situation, the subsidiary data is probably not loaded into the consolidation ledger (CLED).

From 20 percent through 49 percent

Equity

Initial purchase of portion of subsidiary recorded as investment in subsidiary (asset).

The investment in subsidiary changes as the subsidiary records change in equity (income).

In this situation, the subsidiary balances probably would be loaded into the CLED to facilitate equitization. However, you most likely would not consolidate—unless there are other parents in the organization that bring in enough additional control of the subsidiary to force consolidation.

50 percent or greater

Consolidate

The subsidiary's balances are loaded into the consolidation ledger.

Need to define equitization rule to compute and record any non-controlling interest liability for the investment in subsidiary.

To view the parent as a stand alone entity, you might choose to equitize, but then define the rule so that you eliminate the equitization afterwards.

Equitization Processing Options

The processing options that you can select for an equitization rule are:

Equitization.

Use when you are employing the equity method to account for changes in subsidiary equity.
Non-controlling interest only.

Use when you are employing the consolidation accounting method for a subsidiary, to generate the NCI expense for subsidiary equity.
Dividend reclassification.

Use to redistribute dividends received from subsidiaries and the associated tax withholding accounts. Applicable in cases where dividends that were recorded as income at lower levels of an organization need to be reclassified at higher levels of an organization where ownership percentages dictate the use of the equity method.
Source elimination.

Valid only for financial-statement-based consolidation ledgers. Use to eliminate the balances of the equitization source accounts that you identify. This is used in conjunction with the equitization processing option.

Specific rules should be defined for each specific processing option that you use. The processing option that you select dictates which pages appear in the equitization rule component. Once you define and save an equitization rule, you cannot change the processing option. By defining multiple rules using different processing options, and then grouping them into related equitization rule sets and an equitization group, you can process all these situations at one time within your consolidation model.

The following pages are available for specific processing options:

Page Name	Equitization	Non-Controlling Interest Only	Dividend Reclassification	Source Elimination
Equitization Rule	Yes	Yes	Yes	Yes
Source	Yes	Yes	No	Yes
Target	Yes	No	No	No
Non-controlling interest	Yes	Yes	No	Yes
Subsidiary Offset	Yes	No	No	No
Dividend Reclassification	No	No	Yes	No
Notes	Yes	Yes	Yes	Yes

The following sections describe how to define a rule for each type of processing option. By defining multiple rules using different processing options, as needed, you can process all of these situations at one time within your consolidation model.

Equitization Rule Page

Use the Equitization Rule page (GC_EQTZ_RULE) to establish an equitization rule.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule

Image: Equitization Rule page

This example illustrates the fields and controls on the Equitization Rule page. You can find definitions for the fields and controls later on this page.

Ledger Template

Select the consolidation ledger template. The ledger format option, which is established on the Ledger Template - Consolidation Variables page (either Trial Balance Based or Financial Statement Based), determines which fields are available for entry in the equitization rule pages.

See Understanding Ledger Templates.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit.

Processing Option

Select Equitization.

Specifying Equitization Sources

Use the Equitization Rule - Source page (GC_EQTZ_SOURCE) to specify the source ChartField values to equitize.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Source

Image: Equitization Rule - Source page

This example illustrates the fields and controls on the Equitization Rule - Source page. You can find definitions for the fields and controls later on this page.

Data Processing Option

Select the data processing option that you want the elimination rule to use. Your options are Skip Previously Processed Data or Process All Data.

If you select Skip Previously Processed Data, the system processes the data once for a single rule and skips over previously processed data for any other rules.

If you select Process All Data, the system can process the same data again for a different rule.

Equitization Source

Select one or more ChartField value sets containing the accounts to equitize. Typically these are the accounts that store the subsidiary's current income (or earnings).

Specifying Equitization Targets

Use the Equitization Rule - Target page (GC_EQTZ_TARGET) to specify the target accounts for equitization.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Target

Image: Equitization Rule - Target page (1 of 2)

This example illustrates the fields and controls on the Equitization Rule - Target page (1 of 2). You can find definitions for the fields and controls later on this page.

Equitization Rule - Target page (1 of 2)Equitization Target page

Image: Equitization Rule - Target page (2 of 2)

This example illustrates the fields and controls on the Equitization Rule - Target page (2 of 2). You can find definitions for the fields and controls later on this page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a financial statement format.

Specify the accounts on the parent to which the change in subsidiary equity is recorded by completing the fields within the Parent Investment and Investment Offset group boxes. Entries are booked for the percent of subsidiary source owned by the parent.

Parent Investment - Target

Specify the target ChartFields to which the subsidiary equity should be posted. The Account ChartField is required, and you must specify Use a Constant in the Option field.

Note: For the Field Name Flow Code, only the Use a Constant option can be selected.

Parent Investment - Elimination (Optional)

Optionally, you can eliminate the equitization entry by specifying ChartFields in this grid for trial-balance-based consolidation ledgers.

Investment Offset - Target

Specify the target ChartFields to offset the parent investment target entry (credit). Typically this is a revenue account.

Investment Offset - Elimination (Optional)

Optionally, you can eliminate the Investment Offset entry by specifying ChartFields in this grid.

For financial-statement-based consolidation ledgers only, complete the fields within the Offset Balancing grid to credit the equitization of the source.

Offset Balancing - Target

Specify the target ChartFields to offset (or balance) the parent investment target entry (credit). Typically this is an equity account.

For each grid, enter values in these fields:

Field Name

Enter the dimension or ChartField to use.

Option

Select one of the following options:

Use a Constant

Select to enter a specific ChartField (dimension) value to book the amount to, regardless of source. If you select this option, you must also enter a value in the Value field. If you entered Account or Flow Code in the Field Name field, then you must select Use a Constant.
Retain Source Value

Select to book the amount to the same ChartField (dimension) value used in the source lines for the elimination entries.
Same as Target Value

Select to book the amount to the same ChartField (dimension) value used in the target lines for the elimination entries.

Value

If you selected Constant for the Option, then this field is displayed and you must enter a value for the selected ChartField (dimension).

Note: For financial statement format consolidations, the parent investment and offset balance must be balance forward account types and the investment offset must be a non-balance forward account type. You can set up a three-sided entry (all three accounts) or a one-sided entry (just the investment offset account).

Eliminating Non-Controlling Interest for Subsidiary Equity (Optional)

Use the Equitization Rule - Non-Controlling Interest page (GC_EQTZ_MIN_INT) to specify the accounts to offset earnings attributed to non-controlling interest.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Non-Controlling Interest

Image: Equitization Rule - Non-Controlling Interest page

This example illustrates the fields and controls on the Equitization Rule - Non-Controlling Interest page. You can find definitions for the fields and controls later on this page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a financial statement format.

Complete this page to enable the system to calculate the amount of non-controlling interest liability and expense and post it to the accounts specified on this page. Entries are booked to the elimination entity for the non-owned percentage. The system increases the non-controlling interest liability and non-controlling interest expense accounts for trial balance format consolidation ledgers. For financial statement format consolidation ledgers, this affects only the non-controlling interest expense account.

Complete the following grids:

Non-Controlling Interest Expense — Target

Specify the ChartFields for booking the non-controlling interest expense.

Non-Controlling Interest Liability — Target

Specify the ChartFields for recording the non-controlling interest liability when using a trial balance format consolidation ledger.

For each grid, enter values in these fields:

Field Name

Enter the dimension or ChartField to use.

Option

Select one of the following options:

Use a Constant

Select to enter a specific ChartField (dimension) value to book the amount to, regardless of source. If you select this option, you must also enter a value in the Value field. If you entered Account or Flow Code in the Field Name field, then you must select Use a Constant.
Retain Source Value

Select to book the amount to the same ChartField (dimension) value used in the source lines for the elimination entries.
Same as Target Value

Select to book the amount to the same ChartField (dimension) value used in the target lines for the elimination entries.

Value

If you selected Constant for the Option, then this field is displayed and you must enter a value for the selected ChartField (dimension).

To specify additional ChartFields, such as department, insert additional rows.

Subsidiary Offset (Optional)

Use the Equitization Rule - Subsidiary Offset page (GC_EQTZ_OFFSET) to specify the accounts to offset the total equitized source amount.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Subsidiary Offset

Image: Equitization Rule - Subsidiary Offset page

This example illustrates the fields and controls on the Equitization Rule - Subsidiary Offset page. You can find definitions for the fields and controls later on this page.

Complete this page if you want to offset the total equitized source amount (which is booked against an elimination entity) to a specified account. Entries are booked at 100 percent of source. This enables you to move the amount to a separate account, for reporting purposes.

Identify the ChartFields to use for the equitization offset and equitization summary. This offsets the total equitized source amount to the equitization summary account specified in the rule by debiting the equitization offset account for the subsidiary and crediting the equitization summary. These entries are booked against the subsidiary.

Equitization Rule Page (Non-Controlling Interest)

Use the Equitization Rule (GC_EQTZ_RULE) page to establish an equitization rule.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule

Select Non-Controlling Interest Only for the processing option.

Specifying the Source

Use the Equitization Rule - Source (GC_EQTZ_SOURCE) page to specify the source ChartField values to equitize.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Source

Image: Equitization Rule - Source page

This example illustrates the fields and controls on the Equitization Rule - Source page. You can find definitions for the fields and controls later on this page.

The Source page contains the ChartField value sets used for processing non-controlling interest only.

Equitization Source

Select one or more ChartField value sets containing the accounts for processing non-controlling interest only. Typically these are the accounts that store current income (or earnings).

Specifying the Target

Use the Equitization Rule - Target page to specify the target accounts for equitization.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Target

Image: Equitization Rule - Target page

This example illustrates the fields and controls on the Equitization Rule - Target page. You can find definitions for the fields and controls later on this page.

Use the Investment Offset - Target grid to specify the accounts to use when computing amounts due to non-controlling interest. The system uses the accounts to temporarily store the information that it needs to compute non-controlling interest. Even though you are not using this rule to equitize, the system must use this to compute amounts for cases of indirect ownership with multiple levels.

Parent Investment - Target

Specify the target ChartFields. Account is required.

Eliminating Non-Controlling Interest for Subsidiary Equity

Use the Equitization Rule - Non-Controlling Interest page to sthe accounts to offset earnings attributed to non-controlling interest.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Non-Controlling Interest

Image: Equitization Rule - Non-Controlling Interest page

This example illustrates the fields and controls on the Equitization Rule - Non-Controlling Interest page. You can find definitions for the fields and controls later on this page.

This page's contents differ depending on the consolidation ledger format. The example shown is for a trial balance format.

By completing this page, when you process equitization the system calculates the amount of the current period or YTD subsidiary equity accounts (subsidiary income) that is attributed to outside owners. The amount due to non-controlling interest is booked to the elimination entity. The system increases the non-controlling interest liability and non-controlling interest expense accounts for trial balance format consolidation ledgers. For financial statement format consolidation ledgers, this affects only the non-controlling interest expense account.

Non-Controlling Interest Expense

Specify the ChartFields used to record the non-controlling interest expense. Typically, this is a minority interest expense account.

Non-Controlling Interest Liability

Specify the ChartFields for recording the non-controlling interest liability when using a trial balance format consolidation. Typically, this is a minority interest liability account.

For the account ChartField, you must select Constant, and specify the ChartField value for the appropriate account. To specify additional ChartFields, such as department, insert additional rows.

Equitization Rule Page (Dividend Reclassification)

Use the Equitization Rule page to establish an equitization rule.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule

Select Dividend Reclassification as the processing option.

Specifying the Dividend Reclassification Source

Use the Equitization Rule - Dividend Reclassification page (GC_EQTZ_DIV) to specify the source and target accounts for a dividend reclassification equitization rule.

This page is only available when the equitization rule processing option is set to Dividend Reclassification

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Dividend Reclassification

Image: Equitization Rule - Dividend Reclassification page

This example illustrates the fields and controls on the Equitization Rule - Dividend Reclassification page. You can find definitions for the fields and controls later on this page.

Dividend reclassifications need to occur when there is a subsidiary that is owned by multiple parents and where, in total for all parents, there is enough control held to require equitization, but for some individual parents, the level of control is below the equitization threshold. For the parents whose control is below the equitization threshold, the dividend is recorded as income; this needs to be reclassified when you reach the appropriate level of the tree at which the equitization threshold is met.

To properly reclassify the dividends, it is necessary to make two sets of entries. The first set of entries is made against the equitizing parent. This adjusts the data for the equitizing parent, but does not totally correct the overall consolidated results. So, a second set of entries is made to the common elimination unit between the direct parent and the equitizing parent. These are not true elimination entries in the respect that they are directly eliminating the entries made against the parent. Rather they are an independent set of reclassification entries that need to be made to the elimination unit to adjust the overall consolidation.

The equitizing parent and the entries for the elimination unit are independent of one another. In both cases, the process reads the source, and makes the appropriate entries to each business unit to constitute a balanced set of entries. The reverse sign is used the same way in each case. Some entries read the source amount and keep the same sign while others reverse the sign to make the balanced entry. This flag is always in reference to the source.

Use dividend reclassification to redistribute dividends received from subsidiaries and the associated tax withholding accounts. Dividend reclassification is applicable in situations where:

Dividends were recorded as income at lower levels of the organization.
Dividends now need to be reclassified at higher levels of an organization where ownership percentages dictate the use of the equity method.

Specify the ChartFields to use for dividend reclassification by completing the fields within the Dividend/Tax Reclassification Source group box.

Source # (source number), ChartField Value Set, and Description

Specify the source ChartField value set, which is typically the ChartField values that represent total dividends paid by the subsidiary. You can insert multiple sources. Each source must have a unique source number.

Target

Specify the account (and, optionally, other dimension values) to which the system records the reclassification entries for the parent business unit where the equity method is first applied for the subsidiary. The target business unit is identified by the system based on where the subsidiary became equitized for the ownership amounts from the direct parents that received dividends.

Add rows in the Target grid to indicate the target ChartField values. You can specify multiple targets for a source; each target must have its own unique target number. To specify multiple ChartFields for a target, use the same target number for each. Account is required. For the account ChartField only, use the Reverse Sign check box to control whether to debit or credit the target account.

Note: You must ensure that you define balanced entries. Depending on the ledger format, this could be a two-sided, three-sided, or other multiple-sided entry; there is no limit to the number of entries.

Elimination (Optional)

Add rows in the Elimination (Optional) grid to indicate the elimination ChartField values. Specify the account (and, optionally, other dimension values) to which the system records the reclassification entries for the elimination unit that is common between the equitizing parent business unit and the lower level parent business unit that recorded the dividend as income. To specify multiple ChartFields for an elimination, use the same elimination number for each, as shown in the example. Account is required. For the account ChartField only, use the Reverse Sign check box to control whether to debit or credit the account.

Equitization Rule Page (Source)

Use the Equitization Rule (GC_EQTZ_RULE) page to establish an equitization rule.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule

Select Source Elimination as the processing option.

Note: Source elimination rules can be defined only for financial-statement-based consolidation ledgers.

Specifying the Source for Source Elimination

Use the Equitization Rule - Source (GC_EQTZ_SOURCE) page to specify the source ChartField values to equitize

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Source

Image: Equitization Rule - Source page

This example illustrates the fields and controls on the Equitization Rule - Source page. You can find definitions for the fields and controls later on this page.

Source elimination rules can only be defined for financial statement based consolidation ledgers. You can eliminate the equitization source by creating source elimination equitization rules. Source elimination is typically used in conjunction with an equity pickup rule. The equity pickup rules takes the source, equitizes the owned percentage to the parent, and equitizes the non-owned percentage to non-controlling interest. The source elimination should have the same source ChartField value set as the regular equity pickup rule. It completely eliminates the source and reverses the non-controlling interest created by the pickup.

Equitization Source

Specify one or more ChartField value sets containing the accounts to use for source elimination.

Eliminate Source

Specify the ChartField (dimension) values to which the system eliminates the source.

Specifying the Non-Controlling Interest Accounts for Source Elimination (Optional)

Use the Equitization Rule - Non-Controlling Interest page to specify the accounts to offset earnings attributed to non-controlling interest.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule, then select Non-Controlling Interest

Image: Equitization Rule - Non-Controlling Interest page

This example illustrates the fields and controls on the Equitization Rule - Non-Controlling Interest page. You can find definitions for the fields and controls later on this page.

Complete this page to reverse the non-controlling interest..

Non-Controlling Interest Expense - Target (Optional)

Specify the ChartFields for storing the non-controlling interest expense.

Non-Controlling Interest Expense - Elimination (Optional)

Expand the Eliminate NCI Expense region to access this grid and specify the ChartFields for storing the non-controlling interest expense elimination entry.

Equitization Rule Set Page

Use the Equitization Rule Set (GC_EQTZ_SET) page to associate ownership sets with equitization rules to calculate the equitization adjustments and identify the set of equitization rules that should be used for subsidiaries.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Rule Set

Image: Equitization Rule Set page

This example illustrates the fields and controls on the Equitization Rule Set page. You can find definitions for the fields and controls later on this page.

Ledger Template

See Understanding Ledger Templates.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit.

See Understanding Business Units.

Equitization Rules

Insert rows to specify each subsidiary's associated equitization rule.

Add/Update Subsidiary Entity

This region is a work area that you can use to help you complete the Equitization Rules grid.

Select the consolidation tree name and click Get Subsidiary Entity to get new subsidiary entities not already a part of the equitization rule set in the Equitization Rules grid. Select the equitization rule and click the Apply the Equitization Rule to add the selected subsidiary entities.

Equitization Group Page

Use the Equitization Group page (GC_EQTZ_GROUP) to define the equitization rule sets that comprise an equitization group and the order in which to process them.

Include all the equitization rule sets needed to describe every subsidiary for which the system should process equitization.

Navigation

select Global Consolidations, then select Define Consolidations, then select Equitization Rules, then select Equitization Group

Image: Equitization Group page

This example illustrates the fields and controls on the Equitization Group page. You can find definitions for the fields and controls later on this page.

Ledger Template

See Understanding Ledger Templates.

Consolidation Dimension

Select the dimension by which you are consolidating, for example, Ledger Business Unit.

See Understanding Business Units.

Within the Equitization Rules grid, specify all of the equitization rule sets to include in this equitization group, adding additional rows as needed. Include all of the equitization rule sets needed to identify every subsidiary for which equitization should be processed, because only one equitization group is assigned to a consolidation model.

Enter the use order value. Rule set processing occurs in ascending order based on the number in this field. If you selected the data processing option, Skip Previously Processed Data, and the same data exists in multiple rule sets, the first time the data encountered it is used. If you selected the data processing option, Process All Data, the data is processed again for the rule in the rule set appearing in a later sequence order.