1. Administrator's Guide
  2. Managing Metadata
  3. Defining Consolidation Methods
  4. Using POWN or POWNMIN Consolidation Methods

Using POWN or POWNMIN Consolidation Methods

The Calculate Ownership process uses settings in the consolidation method table to calculate the percentage of control and ultimate percentage of ownership, automatically assign the percentage of consolidation, and assign the methods for consolidation.

For the consolidation method corresponding to the EQUITY process, you use the POWNMIN keyword in the consolidation method table. When you use POWNMIN, the percentage of consolidation that is assigned for the EQUITY company corresponds to the percentage used in a consolidation process that is performed in stages.

POWNMIN Calculation 

POWNMIN = POWN + Sum of (Percent Minority of Entity Owners * Direct Percentage of Ownership in the Entity)

Where:

  • Percent Minority = Percent Consolidation – Percent Ownership

  • Entity Owners are any entities within the descendants of the current parent that own shares of the entity being processed

  • Direct Percentage of Ownership in the entity is retrieved from the Shares%Owned system account

Example:

  • B is owned by A: 80%

  • C is owned by A: 70%

  • D is owned by B: 20%

  • D is owned by C: 20%

The Parent entity GROUP has entities A, B, C, and D as dependents (A is the holding company). The system calculates percent ownership as follows:

  • A: 100%

  • B: 80%

  • C: 70%

  • D: 30%

Suppose the Percent Consolidation of D (from the consolidation method table) is POWNMIN.

If the consolidation process is done in stages, the POWNMIN process would be:

  1. Consolidation of D into B using direct ownership percentage: 20%

  2. Consolidation of D into C using direct ownership percentage: 20%

  3. Consolidation of B and C into A using their respective percentages: (80% and 70%)

It is calculated as follows:

Entity D’s Percent consolidation = 30% + (100% - 80%) * 20% + (100% - 70%) * 20% = 40%

Using this staged consolidation process, Entity D is consolidated using a total percentage of 40%.

When the subholdings B and C are consolidated into A, some minority interests corresponding to 10% are calculated on the Equity from Entity D.

POWN Calculation

However, if the consolidation is done using a flat hierarchy, the process typically uses the ultimate percentage of ownership (POWN) as percentage of consolidation for the Equity company. In this case, the percentage of consolidation for D into the Group would be 30%. No minority interests would be calculated on the Equity from Entity D.

In summary:

  • Using POWN, the percentage of consolidation assigned to Entity D would be 30% (ultimate percentage of ownership).

  • Using POWNMIN, the percentage of consolidation assigned to Entity D would be 40% (using a staged consolidation process).