This activity is used to define the equity elimination transaction postings related to an acquisition transaction which should be created in the group consolidation process.
In consolidated accounts, the investment of the parent company should be matched against the equity of the subsidiary company as at the date of acquisition and goodwill or negative goodwill should be recognized accordingly. Further, provisions should be made to the non-controlling interest parties if relevant. In such instances, balances such as parent investment and subsidiary equity items should be eliminated while recognizing certain items such as goodwill, non-controlling interest, etc.
Use this page to enter acquisition transactions between reporting entities and to define equity elimination postings that should be considered when calculating consolidated balances in the consolidation process. The elimination postings should be entered in the currencies of both subsidiary reporting entity and parent reporting entity, if the currencies are different. These balances will be translated to the currency of the consolidation node in the consolidation process.
Note that the elimination details should be entered in the way that the elimination postings should be generated, as the debit or credit side of the entered postings will not be changed during the consolidation process. If the Generate Equity Eliminations option is selected for the used consolidation structure, the elimination entries will be generated during the consolidation process for the consolidation node where the investor reporting entity and the investee reporting entity meets.
There are three types of transaction types generated by using the Acquisition Register. They are,
1. Equity Elimination - Group
2. Equity Elimination - NCI (NCI = Non-Controlling Interest)
3. Exchange Difference - Equity
E.g.: Parent Company has acquired 75% of Subsidiary Company. The currency of P Company is USD and S Company is GBP. The goodwill calculation and non-controlling interest are as follows,
Goodwill Calculation:
| Description | Account | Debit Amount in USD | Credit Amount in USD |
| Parent Investment | 1404 | 5000 | |
| Subsidiary Share Capital | 2081 | 2400 | |
| Subsidiary Pre-Acquisition Reserves | 2067 | 1600 | |
| Goodwill | 1070 | 1000 |
Non-Controlling Interest:
| Description | Account | Debit Amount in USD | Credit Amount in USD |
| Subsidiary Share Capital | 2081 | 600 | |
| Subsidiary Pre-Acquisition Reserves | 2067 | 400 |
The elimination entries in the Acquisition Register are entered as follows,
| Elimination Type | Account | Group Debit in GBP | Group Credit in GBP | Group Debit in USD | Group Credit in USD | NCI Debit in GBP | NCI Credit in GBP | NCI Debit in USD | NCI Credit in USD |
| Parent Investment | 1404 | 3000 | 5000 | ||||||
| Subsidiary Share Capital | 2081 | 1440 | 2400 | 360 | 600 | ||||
| Pre-Acquisition Reserves | 2067 | 960 | 1600 | 240 | 400 | ||||
| Goodwill | 1070 | 600 | 1000 | ||||||
| Non-Controlling Interest | 2862 | 600 | 1000 |
In order to perform this activity:
As a result of this activity, the equity elimination postings related to an acquisition transaction are defined.