Equitization and Changes in Subsidiary Ownership

The Equitization process generates the entries to reflect the equity pickup of subsidiary earnings on the parent's books. It updates the value of the parent's investment and equity income accounts for changes in the subsidiary's value. When the value of an investment in a subsidiary changes for a parent company during the fiscal year, often it is without a physical event (transaction) having been recorded; however, the value of the investment of the parent in the subsidiary must be modified. You can use the PeopleSoft Equitization process when no physical accounting event will have occurred, but the value of the parent investment in the subsidiary has changed.

For example, net income or net loss of a subsidiary increases or decreases the investment value and affects the equity of the parent in that subsidiary.

PeopleSoft General Ledger enables you to set up multiple equitization rules for multiple business units that have complex parent-subsidiary relationships and create journal entries to record the changes within a single process. A ledger for a parent entity can be different from that of its subsidiary but you have the option to generate elimination entries for consolidated reporting.

Equitization can be run alone or in conjunction with consolidation and can share the consolidation tree with the Consolidations process, as well as the ownership sets.

Note:

Equitization supports only the Business Unit field as the processing entity. This is unlike the Consolidation process, which allows consolidation of fields other than business unit, such as the Operating Unit field.