COI questions..

[Former Member]

I have following question and appreciate the inputs..

Q1. For 'Equity holding Adjustments' if the share in the net profit of the 'Investee' is to be accounted thru journal entry in ECC. normally what should be the entry like..( Debit and credit part).

Should the share in the netincome be accounted as P&L account or balance sheet account.

Q2. Question is based on following example...

For example Company A has invested in 5 external company and all are minor shareholding (approx 10%) and accounted thru 'Equity method'.

Now there is only one GL account called investment . What is the best way to maintain the investment values agsaint each 5 external company, but there is only one 'Investment account' under equity method.

It wants to uniquely identify the 5 different investment value seperately updated for 'Share in Netincome' on periodical basis. Is maintaining 5 different GL account for investment is better or is there way around for this.. but maintaining only one GL account?

It prefers to enter these entries in ECC. What is the pros and cons of entering these entries in ECC versus BCS?

[dan_sullivan]

Additionally, I suggest only one account and include trading partner as mentioned by Eugene.

[Former Member]

Q1. I understand when investment consolidated using purchase method we use the 'trading partner'.

Do you suggest to use the trading partner to analyse investment in associated companies consolidated using the 'Equity method'?

Q2. When the full entries are captured in ECC such as 'Dividend', share in the 'Net income', do we still need to maintain the COI settings in BCS for the same?

Does it serve any purpose?

[dan_sullivan]

A1: Yes it is helpful to have trading partner on investments to differentiate with which entities the investment balance is for (reconciliation). In some cases, however the tradin gpartner may not be established in ECC and a different subassignment may be necessary for this.

A2: No the COI settings for equity method serve no purpose when equity method is already applied in ECC.

[Former Member]

Ok. For the 'EHD' from external company investments, we may not be able to use the 'trading partner' since these company code may never be defined in ECC.

So What is ideally used as subassignments to distinguish these investments. Is it by business area, functional area, or a Z field? What is the best practise in your opinion...

[dan_sullivan]

If not used for other purposes, it is easier to use an existing field such as transaction type, business area or functional area.

If it were my choice I would choose transaction type and create unique values for each equity held investee.

Keep in mind that the breakdown category for the investment account should be such that the chosen field is required or optional.

[Former Member]

Hi Gokul,

Q1. Usually the entry is:

Dr Investment (B/S)

Cr Share of income of associated companies (P&L)

Q2. It might be one Investment account. Plus some analytic (like trading partner or investee) is needed.

Making the entry I showed above in ECC free you from maintaining CoI for associated companies in BCS -- it's pro.