E600 - E603: Investment Adjustments - The Dutch and Danish method

Reconciliation is done between the account for investments in the parent company and the total equity in its subsidiaries. The amount on the account for investments should be updated to show the booked value of the total equity, including results and currency translation differences for the subsidiaries. The value of the account should be updated in the parent companies general ledger at least once a year.

Except changes in the results and currency translation differences, there can be changes in different reserves in the equity of the subsidiary, due to for example dividend paid or additional capital. This period change should as well be booked on the parent company on the account Investments with the counter account as one of the parent companies equity accounts. How often the reconciliation is made depends on the user, it varies from once a month to once a year.

The investment adjustment is a legal booking. When the parent companies report their values for the current period, they have normally not yet received the value of the equity in its subsidiaries. The parent company reports a value on the account Investments according to its general ledger and that is the value of the reference period (latest updated value). IBM® Cognos Controller will calculate the adjustments that should be made for the current period and book them on the parent company according to the legal ownership.

Automatic journals are calculated by using the different control tables E600-E603, the sub control table HT02 (for reference period) and the investment register. For elimination of investments at the parent company, control table E770 is used and for elimination of equity in the subsidiaries, control table E760 is used.

Etyp 30 will not roll from one year to the other. The amount calculated and booked as investment adjustment (etyp 30) one year, should be included in BASE values next year. The amount should be adjusted in the general ledger of the parent.

This is only a summary of the process. For more printed information and proven practice examples, contact your IBM Cognos® Consultant.

Parts of the E600-E603 Control Table Window

Table 1. Parts of the E600-E603 Control Table Window

Part	Function
Retained Earnings BS	Add the account where the previous years result is stored. This account is used when the field for Retained Earnings BS is not entered in the General Configuration. See examples in chapter 4.6 General Configuration.
Journal Type	Select this if you like the adjustment to be posted to a certain journal type. If this field isn't defined, the adjustments will be stored on the same journal type or REPO as the source data.
Closing version	Select this if you like the adjustment to be calculated on a certain closing version. If this field isn't defined, the adjustments will be calculated on every journal and reported value.
Contribution version	Select this if you want the adjustment to be calculated on a certain contribution version. You can only include BASE, intercompany elimination (etyp 35), intercompany profit (etyp 36), and allocations (etyp 37) in the calculation.
From Account	Enter the account for the source data. This account can also be a summation account, but then you need to use summation accounts for all E6XX control tables (etyp 30). You cannot mix summation accounts and movement accounts within the etyp 30 control tables. The value on this account(s) will be received from the actual period and compared with the reference period of the subsidiaries. From 8.2 you are able to add movement accounts as from accounts in the control tables.
To Account (change)	Enter the account where the calculated investment adjustment should be stored. The adjustment will be stored on the parent company. Normally you enter an investment account and an account within the equity (often the same as the From Account). The journal must balance.
Dim 1-4	Add the dimension where you want the adjustment to be stored. If these fields are not defined, the elimination will be stored on the same dimension(s) as the source data.
C	Change in equity due to currency translation. This code is used when you want to book the change in equity that occurs due to different currency rates in reference period and actual period. The currency difference will be calculated with conversion code B (closing rate) and M (average rate) only. Example B Control table E601. You can also configure the control table for currency translation with the currency translation accounts in the equity specifications and use change type T or M (total change). The advantage with this example is that you will present a currency translation that has used all conversion codes defined and not only B and M rate as change type C uses. Example A Control table E601.
N	Net change in equity. This code is used when you want to book the real change (that is also a change in local currency) in equity. No change due to currency translation will be included. Example B Control table E602. If you configure control table E601 with the currency translation accounts, you should configure E602 with the other equity accounts and change code T or M (total change), to receive the real change. Example A Control table E602.
T	Total change in equity. This code is used when you want to book the total change in equity, no matter if it is a real change or a change due to currency translation. Example E600, E603.
M	M stands for Movement and this code is used when you have movement accounts as from accounts in the control table. If reference period is within the year, the difference with reference period will be used, but over a yearend, the total amount on the movement account will be used to book the change in equity. This means that if you have movement accounts in the control table and you adjust the investments once a year, you may also use change type T. M and T will work in the same way over year end.