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Hyperion Financial Management ± Proof of Concept
POC Scope and Assumptions
Calendar and Chart of Accounts (segments) Chart of Accounts (segments) and Data Top down and Bottom up approach Journals and Balances Describe the consolidation process Demo Scenarios Copyright © 2008. All rights reserved.Agenda Holding and Subsidiary companies Consolidation Introduction Entities and Balancing segment Currency. Oracle and/or its affiliates. 2 .
Incase of partially owned subsidiary Parent does not own 100% stock and assets. All rights reserved. or limited liability company. also called parent company. in business matters. Copyright © 2008. A subsidiary. The controlled entity is called a company. corporation. is an entity that is controlled by a separate higher entity . and in some cases can be a government or state-owned enterprise. and the controlling entity is called its parent Wholly owned subsidiary whose parent company owns 100% of its common stock and assets. Oracle and/or its affiliates. 3 .Holding and Subsidiary Companies A company that owns enough voting stock in another company to control management and operations by influencing or electing its board of directors.
it often refers to the mergers and acquisitions of many smaller companies into much larger ones. intragroup balances and transactions and profits and losses resulting from intra-group transactions must be eliminated in full. Copyright © 2008.HFM-Consolidation Definition Consolidation or amalgamation is the act of merging many things into one. liabilities. Oracle and/or its affiliates. income and expenses. In the context of financial accounting. 4 . In order for the consolidated financial statements to present the group¶s financial information as that of a single economic entity. equity. In business. consolidation refers to the aggregation of financial statements of a group company as a consolidated account In preparing consolidated financial statements. All rights reserved. an entity combines the financial statements of the parent and its subsidiaries by adding together assets.
Oracle and/or its affiliates.HFM-Entities Definition A business entity is an entity that is a group of people organized for some profitable or charitable purpose. Business Entity is an organization that possesses a separate existence for statutory and tax purposes That the accounting records reflect the financial activities of a specific corporate entity. It is one of the 'ground rules' of accounting. 5 .finance it or work in it. Balancing segment is used in apps ebiz financials for transaction balancing. separate and distinct from the people who own. Copyright © 2008. All rights reserved.
6 . Oracle and/or its affiliates.HFM-Consolidation Process Run Financial Calculations Perform currency translations Apply ownership percentages Eliminate Intercompany balances Copyright © 2008. All rights reserved.
Currency and calendar is as follows: COA segments.(Balancing Segment-Entity-Region code-CCProduct code-Account code-Future) Functional Currency (AED) Calendar year is used as financial year Child COA.Scenario 1 Consolidation for a Full Ownership Subsidiary Parent is Etisalat Group (AED) Child is Etisalat UAE (AED) 100 % owned Parent COA. Currency and calendar is as follows: COA segments.(Balncing segment-Entity-Region code-CCProduct code-Account code-Future) Functional Currency (AED) Calendar year is used as financial year .
00.000 (AED) Profit.000 (AED) Profit.500 (AED) Liability-2.00.000 (AED) Liability-2.500 (AED) Liability-2.000 (AED) Profit.00.000 (AED) Child Etisalat UAE is having following balances: Assets-2.1. Simple consolidation only child Account balances will be clubbed in parent account balances Parent Etisalat Group is having following balances: Assets-3.02.1.Contd.500 (AED) After consolidation will have following new balances in parent Etisalat Group books: Assets-3.02.500 (AED) .00.
Rental expenses ± S $6.Elimination of Intercompany transactions when 100% owned subsidiary Case 1 .250 Cr.000 x 3/12) $6. under a 10-year lease starting on 1 April 2008.000.250 Accounting entries in the books of Etisalat UAE for advance monthly rental expense provision is Dr. Rental income ± P ($25. Intercompany Receivable ± P ($25.000 x 3/12) $6. Etisalat UAE (subsidiary company). The annual rental.2500 Contd«««. is $25.250 Cr. .Leases of property under operating leases Etisalat Group (parent company) leased space for a sale office to its subsidiary. payable in advance. Intercompany Payable ± S $6. Both companies have a year end of 30 June. Accounting entries in the books of Etisalat Group for advance monthly rental income provision is Dr.
000 x 3/12) $6.The accounting entries for the year to 30 June 2008 to eliminate this intragroup rental income and rental expenses in the books of parent Etisalat Group are: During financial consolidation following entry to be passed to 30/06/2008 Dr.250 Cr.250 . Rental income ± P ($25. To eliminate intercompany rental income and expense . Rental expenses ± S $6.Elimination of Intercompany transactions when 100% owned subsidiary Contd«.
INR to AED also what rate type should be used like corporate.e.(Balancing Segment-Entity-Region codeCC-Product code-Account code-Future) Functional Currency (AED) Calendar year is used as financial year Child is Etisalat India (INR) (80% holding) Child COA. .Scenario 2 Consolidation for a Majority Ownership Parent is Etisalat Group (AED) Parent COA. closing etc. Currency and calendar is as follows: COA segments. Currency and calendar is as follows: COA segments.(Balancing Segment-Entity-CC-Account code-Future) Functional Currency (INR) Bank closing year is used as financial year (01-april to 31mar) Note: In this case COA are not same also while consolidation utmost care must be taken when summing child balances into parent generally we use mapping sets to map child accounts to parents also we have to use cross exchange rate I. spot.
Cash ($480.000 Cr. Cost of goods sold 144.000 Dr. Intercompany accounts receivable 430.000 Contd«. Etisalat India still owned $50. Both companies use a periodic inventory system and have an accounting year end of 30 June.$50.000 Cr. Accounting in the books of Etisalat Group Dr. At 30 June 2008. for an amount of $480.Scenario 2 Sale of inventories at a profit to a partiallyowned subsidiary Parent is Etisalat Group (AED) Child is Etisalat India (INR) (80% holding) During the accounting year ended 30 June 2008.000. . Intercompany sales 480. Etisalat India. Inventories ($480.000 Dr.000 X 30%) 144. Etisalat Group sold goods to an 80%-owned subsidiary. the goods were priced at 25% above cost.000 Cr.000) 430. Etisalat India had 30% of the goods from Etisalat Group in inventories on 30 June 2008. Intercompany accounts receivable 480.000 .000 for goods purchased from Etisalat Group.
Intercompany accounts receivable ± P $50.000 Cr. Accounting in the books of Etisalat India Dr.000 Cr.000 The accounting entries needed to eliminate the intra-group transactions and the related unrealized profits in inventories are: 30/06/2008 Dr. Intercompany accounts payable 430.Scenario 2 Contd«. Intercompany accounts payable 480. . Cash 430.000 To eliminate intercompany sales and purchases. Inventory ± S [($480. Intercompany purchases ± S $480. Consolidated retained earnings $28.000 To eliminate intercompany accounts receivable and payable.000 Cr. 30/06/2008 Dr. Intercompany accounts payable ± S $50.000 x 30%) x 25%/(1 + 25%)] $28.000 Cr. Intercompany sales ± P $480. 30/06/2008 Dr.800 To eliminate unrealized profit on inventories.000 Dr.800 Cr. Intercompany purchases 480.
Scenario 3 Intercompany transactions are not matching IC Setup IC Reports as a part of Audit trail showing cases of mismatched IC transactions. when intercompany receivable and payables is not matched then first reconciliation should be done then rectifications then matching and consolidation. .
.Scenario 4 Multi-currency Consolidation Parent is Atlantique Group (AED) Child is Atlanqtiue Telecom (CAF) Show conversions. types of rates. rates setup. Group Consolidated Balance Sheet will be in AED currency.
Scenario 5 Conversion between GAAP and IFRS One specific example of account treatment conversion from Indian GAAP to IFRS. Adjustments are to a Single Line Item example to show the effects restatements in IFRS. . but the Group is consolidated using the IFR Standards. It is assumed that the Indian company Balance Sheet is drawn up using Indian GAAP.
17 . All rights reserved.Copyright © 2008. Oracle and/or its affiliates.
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