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BCS - Consolidation of Investment

Former Member
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HI,

I am confused about journal in Partial Transfer.

A owns 80% of B.

A owns 10% of Z.

B owns 100% of C.

C owns 90% of Z.

And then C do the partial transfer. It transfer 20% Z to A.

The investment in C has been decrease 20.000 USD and 20%.

And Investment in A has been increase 50.000 USD and 20%.

The Journals are following :

Investment C => Z -20.000

Invesment A => Z +50.000

Gain /Loss -30.000

The question is :

Where should the system post the "Gain/Loss"? is it in Cons unit C or in cons unit A?

Thanks in advance.

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Hi,

Actually, consolidation of investments is done on the posting level 30, it's a level of a consolidation group, not a particular company.

Hope this helps.

Former Member
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Sorry,

I means,

Where should the system post the "Gain/Loss"? is it in Cons GROUP C or in cons GROUP A?

Thanks for replying.

Answers (1)

Answers (1)

dan_sullivan
Active Contributor
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The system treats partial transfer as a partial divestiture for the sender, and as an acquisition for the receiver. Gain/losses occur only upon divestiture, thus the cons group with company C would recognize the gain/loss.

Unless the equity in Z has changed via issuance of stock, the system would also recognize goodwill for the cons group of company A.

Former Member
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system will elimate both investment in A and B, following journal be created :

A investment 50.000

C investment -20.000

C differences -30.000

usually the differences will be posted in account "Gain/Loss on Disposal", it seems that there are "Loss on Disposal" in "C".

But my accountant said , it should be a "Gain on dispossal" in C.

Which one is correct? is it a gain or is it a loss on C?

Thanks for Replying

dan_sullivan
Active Contributor
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The system generated gain/loss is the earnings/losses from the time of first consolidation.

Former Member
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Dan,

in the previous message, you said :

"Gain/losses occur only <b>upon divestiture,</b> thus the cons group with company C would recognize the gain/loss."

but now you said :

"The system generated gain/loss is the earnings/losses from <b>the time of first consolidation.</b> "

sorry, but i cannot understand your answers.

dan_sullivan
Active Contributor
0 Kudos

The first reply identified where the gain/loss is booked by the system.

The second the gain/loss is determined by the system.