SAP ConsolidationUser Guide

SAP R/3 ENTERPRISE 4.7

Published by Team of SAP Consultants atSAPTOPJOBS

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Table of Contents

1. Overview .......................................................................................................................... 32. Master Data....................................................................................................................... 3

a. Consolidation Groups (CX1Q) ....................................................................................... 3b. Consolidation Units (CX1N).......................................................................................... 5c. FS Items (CX16, CX14) ................................................................................................. 6

3. Data Tasks ........................................................................................................................ 8a. Balance Carry Forward (CXS1)...................................................................................... 9b. Data Collection ............................................................................................................ 11c. Retained Earnings / Contra Items (CXCL).................................................................... 13d. Currency Translation (CX40)....................................................................................... 15e. Standardizing Entry (CX50) ......................................................................................... 17

4. Consolidation Tasks ........................................................................................................ 18a. Consolidation of Investments (CX57)........................................................................... 20b. Inter-unit Elimination (CX54) ...................................................................................... 23c. Elimination of Profit/Loss on Sale of Fixed Asset to Subsidiary (CX54) ...................... 26

1. Overview

The Consolidation functionality implemented at ABC Ltd is the Enterprise Controlling Consolidation (EC-CS) module in SAP. EC-CS functionality is divided into two types oftasks Data and Consolidation. SAP provides a monitor for each of these two types of tasks,which gives an overall picture of the entire ABC group.

2. Master Data

Each user must key in global parameters (Code: CXGP) before executing any of theConsolidation functions. This is a one-time task and these parameters are used in allsubsequent logins until they are changed.

a. Consolidation Groups (CX1Q)

Consolidation Groups form the organization structure in Consolidation. The Group structurein ABC Ltd is organized in a hierarchy according to region. This may be viewed in thesystem using the Consolidation Group Hierarchy function (Tcode: CX1X).

b. Consolidation Units (CX1N)

The consolidation unit is the smallest element of the group structure for which a completeconsolidation can take place. Consolidation units are the equivalent of company codes in FI.They are linked in the consolidation hierarchy at the lowest node. Consolidation groups maybe collections of various consolidation units.

Information stored in the master data of a consolidation unit typically comprises of thefollowing:

1. Name and Address2. Country3. Language4. Local Currency5. Means of data transfer6. Method of Currency Translation

c. FS Items (CX16, CX14)

FS items are the equivalent of GL accounts in Consolidation. Data flows automatically fromFI to Consolidation into FS Items by means of Real-time Update. There is an Item Hierarchywhich groups FS items into a tree-structure used in Consolidation Reporting as shown below.

Postings to FS items may be further broken down by Sub-items to facilitate reporting. This isachieved by assigning a Breakdown Category to the FS item. The following breakdowncategories have been defined for ABC Ltd.

1. EQTY- For equity related items2. INCO For inter-company items which will be used for Inter-unit Elimination3. ASST For all fixed asset related items acquisition and accumulated depreciation4. GEN For all other items to be broken down by transaction currency5. STAT - For statistical items

3. Data Tasks

The Data tasks can be tracked in a holistic view called a Data Monitor as shown in the screenbelow. The data monitor shows the status of the various data tasks by consolidation units. Alldata tasks for the various consolidation units may be executed from the data monitor.

a. Balance Carry Forward (CXS1)

At year-end consolidation balances are carried forward to the next year. B/S balances arecarried forward to themselves while P&L balances are transferred to the Un-appropriatedRetained Earnings item (520100).

Note: There is a Carry Forward Balances function in FI also (Tcode: F.16), which has nobearing on this transaction. In other words, executing the carry forward transaction in FI doesnot automatically carry forward balances in Consolidation.

Every month, the Retained Earnings function (Tcode: CXCL) should be run for eachconsolidation unit, which posts the current months Retained earnings to items RE ANIB/S (531200) and RE ANI I/S (990400).

At the end of the year, when the Balance Carry Forward function is executed, the figurefrom 531200 gets carried forward to Un-appropriated Retained Earnings item (520100) tofacilitate Consol Reporting.

b. Data Collection

Data flows automatically from Financial Accounting (FI) to Consolidation (EC-CS). In theevent that a particular transaction cannot flow from FI to EC-CS, an email will be sent to theconcerned accountant informing him/her of the problem. The accountant may then eitherreverse the FI entry, fix the problem and re-post the entry or post a standardizing entry inEC-CS without touching FI.

Alternatively, the accountant may check the following report, which reconciles andaccounting document with a consol document (Tcode: CXNX).

c. Retained Earnings / Contra Items (CXCL)

Every month-end, the retained earnings needs to be calculated and posted to the CurrentYear Retained Earnings items in the Balance Sheet and Income Statement such that bothbalance individually. These items are:

Retained Earnings Annual Net Income Balance Sheet : 531200Retained Earnings Annual Net Income I/S: 990400

There is no document number created, it hits the totals database directly. Any subsequentpostings generated automatically by Consolidation functions would post to these items ifthere is an imbalance between B/S and I/S in the consol entry.

d. Currency Translation (CX40)

Currency Translation is done for all companies whose local currency is not SingaporeDollars. This is done in order to bring all foreign currencies up to date with the latestexchange rate with respect to the Singapore Dollar. However, FS items are translated basedon the following.

S. No FS Items Method of Translation Exchange Rate Type1 Equity Historical Rate2 Balance Sheet Closing Rate M3 Profit & Loss Average Rate 1002

Exchange Rates are entered in the system (Tcode: OB08) for exchange rate types M and 1002for Month-end Closing and Average Rates respectively. The average rate will have to bemanually calculated and entered into the system for use by currency translation.

e. Standardizing Entry (CX50)

Sometimes accounting practices followed by group companies in certain regions do notconform to corporate policies. In order to create a common ground for all companies in thegroup some adjustments need to be made in Consolidation. These adjustments are calledStandardizing entries. The manner in which standardizing entries are passed is quite similarto journals in FI, except that the line items are posted to FS items (instead of GL accounts inFI).

4. Consolidation Tasks

The Consolidation tasks can be tracked in a holistic view called a Consolidation Monitor asshown in the screen below. The consolidation monitor shows the status of the variousconsolidation tasks by consolidation groups. All data tasks for the various consolidationgroups may be executed from the data monitor.

a. Consolidation of Investments (CX57)

Consolidation of Investments is a function used to eliminate share capital ownership as wellas retained earnings between group companies, divestitures, transfers and amortization ofgoodwill. The transaction data is entered using Tcode CX21. Consolidation of Investmentsfunction (Tcode: CX57) is executed for the various activities as listed below:

01 First Consolidation02 Subsequent Consolidation03 Amortization of Goodwill08 Partial Transfer09 Total Transfer10 Partial Divestiture11 Total Divestiture

b. Inter-unit Elimination (CX54)

Inter-unit Elimination functions are executed in order to neutralize transactions that havetranspired between companies within the group. There are various types of eliminations thatare described in detail below.

Receivables/Payables

Inter-company receivables and payables are eliminated so as not to overstate the figures forthe group as a whole. The items that are eliminated are:Inter-company Receivables: 220300, 220400Inter-company Payables: 220300, 220400

Long Term Loans

Inter-company long term loans taken and given are eliminated so as not to overstate thefigures for the group as a whole. The items that are eliminated are:Long Term Loans Given: 140200, 140600, 140700, 140800Long Term Loans Taken: 410700, 411100, 411200, 411300

Short Term LoansInter-company short term loans taken and given are eliminated so as not to overstate thefigures for the group as a whole. The items that are eliminated are:Short Term Loans Given: 250100, 250200, 250300, 250400, 250500Short Term Loans Taken: 370100, 370200, 370300, 370400, 370500

Dividend

Inter-company dividend income and expense are eliminated so as not to overstate the figuresfor the group as a whole. The items that are eliminated are:Dividend Income: 801030Dividend Expense: 901010

Inter-company Revenue / COGS

Inter-company revenue and cost of goods sold are eliminated so as not to overstate the figuresfor the group as a whole. The items that are eliminated are:Revenue: 600230COGS: 701020

Management Fees

Inter-company Management Fees and Income are eliminated so as not to overstate the figuresfor the group as a whole. The items that are eliminated are:Management Income: 600910Management Fees: 805070

c. Elimination of Profit/Loss on Sale of Fixed Asset to Subsidiary (CX54)

Assets sold to by a company to another company within the group would generally result in aprofit or a loss, which must be elimination in consolidation. The items affected are:

Profit on Sale of Fixed Asset: 801040Loss on Sale of Fixed Asset: 826010

Only profit/loss on sale of asset to inter-company customers is eliminated. An inter-companycustomer is differentiated by means of the trading partner field populated in the inter-customer master record.

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