Processing Equitization

This section provides an overview of equitization processing and discusses how to run the Equitization application engine.

Pages Used to Process Equitization

Page Name	Definition Name	Navigation	Usage
Equitization run control	RUN_GC_EQTZ	select Global Consolidations, then select Process Consolidations, then select Equitization	Run the Equitization application engine.
Journal Selection	RUN_GC_JRNL	Click the Select Journals link on the Equitization run control page.	Select which journals to include when using the Proforma option.

Understanding Equitization Processing

If you have set up equitization groups for your consolidation model, use the Equitization run control page to equitize the current period changes in equity (for example, net income) of subsidiaries.

When processing equitization, the system completes these steps for each ChartField value in the equitization rule group:

Resolves data from the consolidation ledger (CLED) into the ILOG, based on the equitization rule group for the consolidation model, the fiscal year, and the period that you specify in the run control, and adds a sequence number key to each row.
Debits the ownership percentage amount for the account of the subsidiary against the parent investment account of the parent (if the control percentage is greater than the threshold), and credits the ownership percentage amount for the account of the subsidiary against the investment offset of the parent, and then moves the data to the OLOG.

These entries, which increase the parent investment account and increase parent earnings, are booked directly against the parent. Optionally, the system eliminates the amount equitized against the elimination entity (if you define the eliminate equitizations fields for the rule). For financial statement format ledgers, the system creates offset balance entries for the income statement side, similar to the investment offset entries.
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, and then moves the data to the OLOG.

These entries are booked against the subsidiary. (This is an optional step, completed only if defined on the Equitization - Subsidiary Offset page.)
Generates non-controlling interest adjustments for claims on the subsidiary's net income for the period.

For trial balance format ledgers, the system debits the non-controlling interest expense account and credits the non-controlling interest liability account. For financial statement format ledgers, only the expense entries are created. The entries are booked to the elimination entity.
For financial statement format ledgers, creates elimination entries at the controlling parent to eliminate 100 percent of the source amounts identified if the equitization rule's processing option is Source Elimination.

Optionally, the system creates non-controlling interest entries and the corresponding elimination entries.
Creates dividend reclassification entries to the equitizing parent for the dividend amounts of a subsidiary, distributed to the direct parents of the subsidiary if the equitization rule's processing option is Dividend Reclassification.

Optionally, the system creates additional reclassification entries for the dividend amount to the elimination unit that is common to both the equitizing parent and the direct parent.
Creates reversal entries for the equitization, if necessary.

This step depends on the processing method, which is established on the Ledger Template page for the consolidation ledger. The system creates reversal entries only if you are using a trial balance format ledger and processing year-to-date, except when you are processing the last accounting period of the year.
Merges the temporary ILOG and OLOG tables into their permanent tables, GC_ILOG_XXX_TBL and GC_OLOG_XXX_TBL, respectively.

Creates journal lines in the journal table with one of these GC_SOURCE values:

Equitization.

Equitization - elimination entry.

Non-controlling interest for current earnings.

Equitization - subsidiary offset entry.

Equitization - elimination of NCI.

Equitization - elimination of source.

Equitization - dividend reclassification.

Posts the journals to the CLED, if you choose to automatically post the journals.

If you are processing a rerun, then during the initial stages of processing, any journals that were posted during the prior run affecting the same data are unposted, or are deleted if they weren't posted. If you rerun using a different consolidation tree node, the system only unposts (or deletes) journals from the prior run that were recorded against nodes within the tree node now being processed.

If you make any changes to consolidation rules, it is import to rerun the validation engine again and carefully review the output.

Equitization Run Control Page

Use the Equitization run control page (RUN_GC_EQTZ) to run the Equitization application engine.

Navigation

select Global Consolidations, then select Process Consolidations, then select Equitization

Image: Equitization run control page

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

Unit, Scenario ID, Fiscal Year, and Period

Specify the common consolidation business unit, scenario ID, fiscal year, and accounting period to process.

Jobstream ID

Accept the default value, GC_EQ_MGR, to use the delivered jobstream ID.

Select any of these processing options to use:

Override Scenario's Tree Node

Select to use a different tree node than that specified on the consolidation model. In the Tree Node field select a tree node if you use this option. The tree node that you specify must be at a lower hierarchical level of the tree than the node specified on the consolidation model. If the consolidation model is configured for tiered consolidations, the user can select only the tree nodes specified on the Tiered Consolidation page.

Note: Use this option carefully. When processing by nodes, if you run equitization for a node that includes only the parent, the system does not equitize from the child to the parent. If you run the process for a node that includes only the child, the system does not create the equitization entries on the parent or to the elimination unit. You must pick a node that includes both the child and the parent to create the equitization entries; the entries are booked to the appropriate parent and elimination unit.

Proforma

Select to use proforma journals (journals that have not been posted) as source data, rather than the consolidation ledger. When you select this option, the Post Journal Created option is disabled, as the system does not post the proforma journals as part of consolidation processing. Use the ledger post process to post proforma journals.

Post Journal Created

Select to automatically post the resulting journals to the consolidation ledger by calling the ledger post process. This option is not available when the Proforma option is selected.

Get Prior Run Differences

Select to compare results of the current run with that of the previous run and store the differences in the consolidation change log, which can be viewed on the Run Difference Analysis page. This field is available only if it is selected on the General Options page.

See Understanding Consolidation Processing.

Update Flow Amounts

Select to update flow amounts when processing equitizations.

Updates any flow amounts after the consolidation process has been run. This option is available only if flow processing has been turned on at the ledger template level. and the Post Journal Created option has been selected on the Equitzation run control page.