According to section 305 of the Handelsgesetzbuch (HGB - German Commercial Code), all income and expenses between consolidated companies must be eliminated.
IDL Konsis supports the netting of income and expenses with associated companies at varying levels of detail. This fulfills the statutory requirements.
As a rule, the approach taken when consolidating income and expenses does not differ from the approach taken when consolidating debts. As this relates to the same program, this documentation mostly describes the items that are different from debt consolidation.
The fundamental requirement for consolidating income and expenses is that there are IC accounts and corresponding IC sub account balances (ICKTOSAL) for the current period. The balances have to be available for the fact that is intended for the consolidation.
IC accounts are defined in the master account (application accounts "KTO"). Here, an "I" must be entered in the field for account flag 1 (from release 5.40 "J" is also possible). This code allows the KTOSAL IC master account balance to be further specified, i.e. broken down according to the corresponding counter companies in the ICKTOSAL application.
Like all other accounts intercompany profit and loss accounts can be simultaneously allocated to individual reports in account flag 2.
There are some profit and loss accounts for which it makes sense to use the code "I" or "J", but for which no consolidation processing type (KV) is entered. These include, for instance, income from equity participations in associated companies, which are taken into account as part of consolidation at equity, or income/expenses are from the disposal of assets.
IC account balances can either be logged directly in the ICKTOSAL application or imported via the IDL Konsis interface application IMPORT (KPICSALD.TXT and KPICKONV.TXT). They are logged separately according to the respective subsidiaries as a drilldown of the corresponding IC master account.
The consolidation code "AE" is to be used for all of the accounts to be included in the consolidation of income and expenses. An entry "AE" (or A0 ... A9) in the field "consolidation processing" (KV) in the master account (application accounts "KTO") is also made for all of the profit and loss accounts which contain an "I" or "J" in account flag 1 and which are to be included in the consolidation of income and expenses.
Figure: Code for IC accounts with processing code (KV) "AE"
The consolidation funktions (KVA) allows users to define customer-specific, issue-related determination of circles/groups, e.g. for interest, transfer profit or loss, allocations, etc., to associated companies. This approach leads to smaller observation units, and thus to greater transparency during consolidation.
The keys A0 to A9 are available for these customer specific determination groups. These keys are not superseded by new releases.
For more information on the further procedure, please see the information in the documentation for debt consolidation in chapter Definition of consolidation processing
In the application consolidation parameters (KTKPAR), certain master data have to be defined which have to be valid for processing the consolidation of income and expenses.. This consolidation parameter is to be setup by the user per group/subgroup for the fact to be used for consolidation (often I4) per settlement period and per consolidation processing type (e.g., A0, A1, AE). If this parameter has been defined once, it is carried forward to the subsequent period as part of the formation of carryforwards (PERKTK). It is essential that the accounts for clearing differences are stated. These are to be recorded for income and expenses. Filling further fields is optional. Both accounts for exchange-rate differences are exclusively used in connection with the use of transaction currencies.
Important note: in contrast to debt consolidation, no carryforward bookings are created from bookings for the consolidation of income and expenses.
A threshold can be defined per type of consolidation processing (e.g., A0, A1, AE) and per subgroup. If all of the differences are to be offered so that these can then be processed manually, no threshold is to be put into KTKPAR.
Important note: It is not possible to simultaneously use the options "threshold" and "Alignment to expenses and income"!
For further information please see in the documentatioforn debt consolidation in chapter Definition of consolidation parameter.
A transaction currency threshold (TW threshold) can also be defined for the consolidation of income and expenses just as is the case for debt consolidation.
Figure: Threshold for transaction currency
Important note: It is possible to simultaneously use the options "TW-threshold" and "Alignment to expenses and income"!
If the program finds transaction currency values in any company couple, further processing depends on whether the transaction currency values match.
As a rule, reciprocal differences within a posting are treated separately and booked un-netted. If the option "DiffAccum" is selected by entering an "X" in the corresponding field, the total difference is calculated and booked net.
If amounts are cleared using a transaction currency, this has precedence; there is also no accumulation and "X" has been entered.
This option is only available for the consolidation of income and expenses, not for the consolidation of debt. There is no special status in KGESGES which indicates that this control has been used.
The alignment defines at which side and for which company the settlement booking is made, irrespective of the size of the values. It makes sense to use this control in case, for example, only the expenses are to be broken down by IC company within the group, but not the income.
Important note: Simultaneous use of the options "Alignment to expense and income" and "threshold" is not possible, and is thus ruled out by the program! In contrast, however, simultaneous use of the options "Alignment to expenses and income" and "TW-threshold" (see figure 2) is possible!
You will also find a table as an Excel file in the document directory. All of the examples are based on company balances for which no transaction currency was used.
Figure: KTKPAR alignment according to income/expenses
As the accounts from the fields "threshold clearing expenses" and "threshold clearing income" can be used both for the use of the threshold as well as for use of the alignment according to income or expenses, this can lead to misunderstandings when assessing the consolidation bookings and the accounts entered there have a reference to threshold clearing in the account name.
The balances of companies with currency codes that differ from the group currency are initially entered in IDL Konsis in local currency (e.g. USD). As a result, the intercompany balances are also recorded/imported in local currency. However, the consolidation of income and expenses requires that the IC information is available in group currency. As a result, non-group-currencies must be converted prior to the start of the consolidation of income and expenses for foreign-currency companies. If currency has not yet been converted for a company prior to and income/expenses consolidation run, the IC accounts for this company are shown with 0.00 in the consolidation booking due to the lack of group currency values.
As is also the case for all other consolidation activities, the starting point for consolidation processing "Consolidation of I+E" is the central control overview for groups + group monitor (KTKGES). This starts the consolidation of income and expenses for all companies, or selectively for specific companies (specific companies are to be marked in advance) via the pulldown menu "action" or alternatively with a right-click using the mouse. If the SortOption "K" is used, which is generally the case, the subgroups are to be unfolded, so that the "hidden" companies there can also be marked.
In order to avoid double bookings for the consolidation of income and expenses, users absolutely must start processing with subgroups.
In a "run in the dark", the system compares income and expenses in each company couple. If the user has defined individual determination groups in KVA and attributed accounts with these (e.g. with A0, A1, etc.), a consolidation booking is generated per KVA.
For further information please see in documentation debt consolidation in chapter Calling up debt consolidation .
After the automated run for income and expenses consolidation, users can branch off to KGESGES from the KTKGES application by calling up the action "Expenses/income consolidation - IC clearing list". Here, users can select all companies with the status "4" (= manual intervention required) using the booking status field. Subsequent processing is only required for the KGESGES records with the status "4". The overview is initially restricted to the company that was marked in KTKGES. There are three possibilities of showing all of the relevant income/expenses consolidation relationships:
The booking slip numbers generated by IDL Konsis comprise the company couples and the type of consolidation processing (e.g., A0, A1, AE) in line with the abbreviation. The following example shows the structure.
Figure: Booking number convention
In general, in the application "Consolidation bookings overview (KONBUCH)", the known figures (expenses and income between affiliated companies according to the data input in the IC account balances) are already shown from an elimination perspective.
All differences for which IDL Konsis was not able to automatically generate a full elimination booking, are offered for manual clearing. If a account for temporary differences was entered in KTKPAR AE, this is booked with the difference. Users must attach the manual book-out of the difference to the automatic but not yet complete consolidation booking in additional debit and credit booking lines. If the user avails of the opportunity of the account for temporary differences, each finished consolidation slip receives two lines with the account for temporary differences (exception: expenses and income correspond).
If no UB interim account is entered in the consolidation parameter AE, IDL Konsis generates a consolidation booking which then does not add up by the amount of the difference.
Irrespective of whether or not a UB interim account is used, IDL Konsis points out the difference explicitly in both the consolidation slip overview (KONBEL) and in KONBUCH. Users must add the amount of difference by inputting one or several accounts with the respective values as a clarification booking. The booking line at that by the user can be recognized by the processing status in column "B", as it is marked by the program with "5". In the example below, you see the different stati from "1" (= automatically generated) to "5" (= manually generated).
As no carryforwards are generated from bookings for the consolidation of income and expenses, it does not make sense to eliminate income or expenses from the disposal of assets as part of the consolidation of income and expenses. If the accounts for the disposal of assets have been marked with a "consolidation function", it makes sense to book the values back to the respective account and to eliminate this income/expenses as part of the elimination of intercompany profits assets, or in a manual slip.