Configuring Equity Pickup Rules in Financial Consolidation and Close

Introduction

This 25 minute hands-on tutorial shows you how to configure Equity Pickup consolidation rules. The sections build on each other and should be completed sequentially.

Background

For legal companies that record their investments in another legal company using the equity valuation method, the cost of the investment at time of acquisition is adjusted periodically to reflect the holding company's ownership share of the profits and loses recorded by the other company. This periodic adjustment is often referred to as Equity Pickup (EPU). The Equity Pickup feature provides dimension members and business rules to calculate Equity Pickup for holding companies. The Equity Pickup adjustment for holding companies is recorded in the seeded Equity Company Income account, with a balancing entry recorded in the seeded Investment in Equity Companies - Equity Pickup account. Data for Equity Pickup is stored at the EPU member of the Data Source dimension.

Prerequisites

An EPM Cloud Service instance allows you to deploy and use one of the supported business processes. To deploy another business process, you must request another EPM Enterprise Cloud Service instance or remove the current business process.

Have Service Administrator access to EPM Enterprise Cloud Service. The instance should not have a business process created.
Upload and import this snapshot into your Financial Consolidation and Close instance.

Note:

For more information on uploading and importing migration snapshots, refer to the Administering Migration for Oracle Enterprise Performance Management Cloud documentation.

Enabling Equity Pickup

You enable the Equity Pickup Feature using the Setup Wizard during business process creation, or from the Configuration page afterward. Enabling the feature adds the Equity Pickup Source member to the Account dimension and the EPU member to the Data Source dimension. You enable the Equity Pickup system rule from the Consolidation process page.

From the Home page, click Application, then Configuration.
Click Enable Features.
In the Accounts Reporting section, verify that Equity Pickup is selected.
Click Close.
Click Consolidation.
Review the ownership structure for FY25 under Manage Ownership tab.

Click the Consolidation Process vertical tab to display the Consolidation Process Page.
Select the Equity Pickup row.
In the right-side panel, verify that Equity Pickup sequence and calculation is set to Yes.

Deploying the Equity Pickup rule-sets

To configure the Equity Pickup consolidation rules, you deploy the EPU - Prepare Source Data rule-set, the EPU - Reverse Holding Company Data rule-set, and one of the Consolidate EPU Source Data rule-sets.

Note:

: For hierarchies with holding companies at more than one level, the Consolidate EPU Source Data rule-sets calculate the upper-level holding company's Equity Pickup from the subsidiaries of a lower-level holding company, based on its ownership share in the lower-level holding company. Deploy the Consolidate EPU Source Data rule-set to include Equity Pickup detail for each subsidiary of the lower-level holding in the upper-level holding company. Deploy Consolidate EPU Source Data Indirect Grouping to include only a summarized value, without detail for each subsidiary. You can only deploy one of these rule-sets. In this example you deploy the Consolidate EPU Source Data rule-set.

In the Consolidation Process page, click Consolidated.

Click Configurable Consolidation to open the Manage Consolidation Rules dialog box.

In the list of rule-sets, select:

EPU - Prepare Source Data
EPU - Consolidate EPU Source Data
EPU - Reverse Holding Company Data

Click Deploy.

At the Information dialog box, click OK.

Click Close to return to the Consolidation Process page.

Running Equity Pickup consolidation rules

In this section, you run the consolidation process and then review the calculation results. The Equity Pickup system rule and the Equity Pickup rule-sets you deployed run as part of the consolidation process.

Running consolidation rules

From the Home page, click Data.
Open the Reference_Application folder, then the Equity Pickup folder, and click EP Data.
Review the form data.
The form shows the data for Legal Entity 0012 and its subsidiaries. The column for Total Equity > Total Movement Changes is empty because parent members for the Movement dimension are not populated until consolidation has been run.
In the data form, right click a cell in the row for Consol Entity 0012 (USD) to display the pop-up menu, and then select Consolidate.
Verify the following member information in the Consolidation dialog box, and then click Launch.
- Entity: CE-0012-(USD)
- Scenario: Actual
- Period: Jan
- Year: FY25
At the Information dialog box, click OK.

Review the data. The Total Equity account has been populated by the consolidation process. This is the source data for the calculations performed by the Equity Pickup rules.

Click the X in the tab for EP Data at the bottom of the page to close the form and return to the Data page.

Reviewing the calculation results

Expand the Reference Application folder, and then the Equity Pickup folder, and click EP Calculations.
Review the calculation results.

bullet1 For each subsidiary, the rules in the Prepare Data Source rule-set applied the holding company ownership percentage to the Total Equity amount, and wrote the result to the Equity Pickup Source account for the entity. Equity Pickup Source is a memo account that does not roll up in the balance sheet; it is used only as a data source for the other Equity Pickup calculations.

bullet2 For each subsidiary, the Equity Pickup system rule wrote the amount in Equity Pickup Source to the Equity Company Income account of the holding company, using the ICP dimension to record the source entity. The rule wrote a balancing entry to the Investment in Equity Companies - Equity Pickup account.

bullet3 The rules in the Reverse Holding Company Data rule-set then wrote reversals to the elimination member for the Equity Company Income and Investment in Equity Companies - Equity Pickup accounts , resulting in a Contribution of zero to the parent. This ensures the data is not double-counted in the consolidated results.

Click the X in the tab for EP Calculations at the bottom of the page to close the form and return to the Data page.
Expand the Reference Application folder, and then the Equity Pickup folder, and click EP Multiple Holding.
Review the calculation results.

During consolidation, the Equity Pickup values in Equity Pickup Source for Legal Entity 0012 and its subsidiaries roll up to Consol Entity 0012.

The upper-level holding company, Legal Entity 0011, owns 80% of Consol Entity 0012.

The rules in the Consolidate EPU Data Source rule-set make an adjustment in the Elimination member to bring the Contribution amount for Equity Pickup Source to 80%. This represents Legal Entity 0011's Equity Pickup from the subsidiaries of Legal Entity 0012, due to its indirect ownership of them.

In the data form, right-click a cell in the row for Legal Entity 0011 (EUR) to display the pop-up menu, and then select Consolidate.
Verify the following member information in the Consolidation dialog box, and then click Launch.

Entity: LE-0011-(EUR)
Scenario: Actual
Period: Jan
Year: FY25

At the Information dialog box, click OK.
Review the data.

The Equity Pickup system rule used the Contribution amount in the Equity Pickup Source account of Consol Entity 0012 to populate the Equity Company Income and Investment in Equity Companies - Equity Pickup accounts in Legal Entity 0011, the upper-level holding company, and the EPU - Reverse Holding Company Data rule-set wrote reversals to the Elimination member.