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Adaptive Planning
Example: Set Up Net Income for Full Consolidation

Example: Set Up Net Income for Full Consolidation

This example illustrates how to set up net income accounts in the general ledger so that data flows to the balance sheet. You’ll create 2 child accounts that roll up to your general ledger Net Income account. When completed as part of full consolidation, the data rolls up in the level hierarchy with the appropriate minority adjustments.
Parent Company owns 80% of a subsidiary called Child Company. You want the net income account in the Income Statement to flow properly into the net asset account in the Balance Sheet. You also want data to roll up to the parent company with adjustments based on ownership.
Your model:
  • Actuals version.
  • Calendar set up with Months, Quarters, and Years.
  • Your Income Statement is a standard sheet that includes the Net Income general ledger account.
  • Your Balance Sheet is a standard sheet that includes the Equity general ledger account.
  1. Go to
    Modeling
     and click
    General Ledger Accounts
    .
  2. From the account list, highlight the
    Net Income
     account and click
    Create new account
     from the toolbar.
  3. Read the warning message and click
    Yes
    .
  4. In the settings for:
    • Code
      , enter
      NI_PreAdj
       .
    • Name
       enter
      Net Income (Pre-Adj)
      .
    • Type
      , select
      Periodic
      .
    • Exchange Rate
      , select
      Avg: Monthly Average
      .
  5. Click
    Save
    .
  6. From the account list, highlight
    Net Income
    , and click
    Create New System Account
     from the toolbar.
  7. In the settings for:
    • Code
      , enter
      MI_Adj
      .
    • Name
      , enter
      Minority Interest Adjustment
      .
    • Exchange Rate
      , select
      Avg: Monthly Average
      . The Exchange rate of the system account must always match the net income account.
  8. Click
    Save
    .
The
Net Income
 account has 2 child accounts:
  • Net Income (Pre-Adj)
    .
  • Minority Interest Adjustment
     (system account).
Both accounts display automatically on the Income Statement sheet because their parent account already exists on the sheet.
Data in:
  • Net Income account moves to the Net Income (Pre-Adj) account.
  • The rollup at the parent level is the raw total of the subsidiaries before any adjustments.
Once you define these accounts as part of the full consolidation method, the system account automatically calculates the minority interest. The account then subtracts the minority from the rollup value at the parent level. Example: If Parent owns 80% of Child, the system account multiplies the Net Income value by 20%, reducing the value for the Parent rollup.
To automate the data flow from your Income Statement to the Balance Sheet, set up the net asset accounts.