Full Goodwill events

Initial consolidation - no control - Full Goodwill

This type of event is used for new acquisitions when these conditions are met:

The owner entity does not acquire control of the owned entity (acquired entity).
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The ownership % held by the owner entity in the owned entity.
The value of the financial investment when the acquisition took place. This value is loaded onto a variation account, typically increases or other entries.
The owned entity's net equity value in the last available financial statements. This value is loaded onto a variation account, but this loading is NOT mandatory.

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows
Goodwill account indicated in the financial investment elimination logic from the ownership structure register. CCH Tagetik calculates the difference between the value of the financial investment and the sum of the net equity accounts present in the elimination and writes that value on the variation goodwill account using the incoming or incoming/outgoing variation as the reason. If no variations have been created for the goodwill account, or the specific variation account has not been related to the process, the value is written on the normal goodwill account.

For this type of event, the Full Goodwill accounts are not defined, as the owner entity does not control the owned entity.

Initial consolidation - with control - Full Goodwill

This type of event is used for acquisitions when these conditions are met:

The owner entity acquires control of the owned entity.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The ownership % held by the owner entity in the owned entity.
The value of the financial investment when the acquisition took place. This value is loaded onto a variation account, typically increases or other entries.
The owned entity's net equity value in the last available financial statements. This value is loaded onto a variation account, but this loading is NOT mandatory.
The fair value of the acquired entity.

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows
Goodwill account indicated in the financial investment elimination logic from the ownership structure register. CCH Tagetik calculates the difference between the value of the financial investment and the sum of the net equity accounts present in the elimination and writes that value on the variation goodwill account using the incoming or incoming/outgoing variation as the reason. If no variations have been created for the goodwill account or the specific variation account has not been related to the process, the value is written on the normal goodwill account.
Rows related to the Full Goodwill calculation. The system calculates rows related to Full Goodwill by separating the group's part from the part owned by minorities and assigning the right offsetting entry to each of these rows. In particular, it considers the following percentages:
ownership % between the owner entity and the owned entity. The system applies this percentage to the difference between the fair value and the net equity value and writes that value onto the Group full goodwill account. This account is indicated in the financial investment elimination logic from the ownership structure register. The relative offsetting entry is made on the same goodwill account.
% owned by minorities (100 - % ownership). It applies this percentage to the difference between the fair value and the net equity value and writes that value onto the Minorities full goodwill account. This account is indicated in the financial investment elimination logic from the ownership structure register. The relative offsetting entry is made on the reserve account of the minorities or on the consolidation journals loading account present in the reversals rule associated with the process.

Step up consolidation - no control - Full Goodwill

This type of event is used for acquisitions when these conditions are met:

The owner entity acquires a further share of an entity already belonging to the group without achieving a controlling position with the new acquisition.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership %.
The value of the increase in the financial investment on a variation account when the new acquisition is made (typically increases or other entries).
The acquired entity's net equity value. The value before considering the new acquisition (normal accounts).
The acquired entity's net equity entries that were made when the new acquisition took place (variation accounts), are registered.

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Goodwill account indicated in the financial investment elimination logic from the ownership structure register. CCH Tagetik calculates the difference between the value of the financial investment and the sum of the net equity accounts present in the elimination and writes that value on the variation goodwill account using the incoming or incoming/outgoing variation as the reason. If no variations have been created for the goodwill account or the specific variation account has not been related to the process, the value is written on the normal goodwill account.

For this type of event, the Full Goodwill accounts are not defined, as the owner entity does not control the owned entity.

Step up consolidation - with control - Full Goodwill

This type of event is used for acquisitions when these conditions are met:

The owner entity acquires a further share of an entity already belonging to the group over which it already has control.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership %.
The value of the financial investment on a variation account when the new acquisition is made (typically increases or other entries).
The acquired entity's net equity value. The value before considering the new acquisition (normal accounts).
The acquired entity's net equity entries that were made when the new acquisition took place (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Rows related to the group/minorities reclassification of Goodwill accounts
Consolidation differences account

Full Goodwill is only generated for types of event which result in the acquisition of control by the owner entity of the owned entity. In events subsequent to the event related to the acquisition of control, where such control is in any case retained, it is sufficient to reallocate the share of the Full Goodwill belonging to minorities to the group.

To calculate the amount to be reallocated, the system applies the event's percentage variance (event percentage minus the previous event percentage) to the sum of the Group Full Goodwill and Minorities Full Goodwill accounts related to the previous event. The amount thus calculated is written off from the Minorities Full Goodwill account (offsetting entry reserves pertaining to minorities or on the consolidation journals loading account present in the reversals rule associated with the process) and reallocated to the Group Full Goodwill account.

The journal is then automatically balanced by adjusting the positive or negative consolidation differences account, based on the sign of the balancing row. That account is indicated in the financial investment elimination logics from the ownership structure register.

Step up consolidation - control obtained - Full goodwill

This type of event is used for acquisitions when these conditions are met:

The owner entity acquires a further share of an entity already belonging to the group through which control of the entity involved is acquired.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership %.
The value of the financial investment on a variation account when the new acquisition is made (typically increases or other entries).
The acquired entity's net equity value. The value before considering the new acquisition (normal accounts).
The acquired entity's net equity entries that were made when the new acquisition took place (variation accounts).
The fair value of the acquired entity.

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Goodwill recalculation rows. CCH Tagetik calculates the difference between the value of the increase in the financial investment and the relative variance in the net equity eliminated in the journal and writes that value on the variation goodwill account using the incoming or incoming/outgoing variation as the reason. If no variations have been created for the goodwill account, or the variation account has not been related to the process, the value is written on the normal goodwill account.
Rows related to the Full Goodwill calculation. The system calculates rows related to Full Goodwill by separating the group's part from the part owned by minorities and assigning the right offsetting entry to each of these rows. In particular, it considers the following percentages:
ownership % between the owner entity and the owned entity. The system applies this percentage to the difference between the fair value and the net equity value and writes that value onto the Group full goodwill account. This account is indicated in the financial investment elimination logic from the ownership structure register. The relative offsetting entry is made on the same goodwill account.
% owned by minorities (100 - % ownership). It applies this percentage to the difference between the fair value and the net equity value and writes that value onto the Minorities full goodwill account. This account is indicated in the financial investment elimination logic from the ownership structure register. The relative offsetting entry is made on the reserve account of the minorities or on the consolidation journals loading account present in the reversals rule associated with the process.

Partial disposal - no control - Full goodwill

This type of event is used for assignments when these conditions are met:

The owner entity sells a share in the ownership of an entity that it does not control.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method)

The ownership structure register is fed as follows:

The new ownership percentage.
The value of the decrease in the financial investment when the assignment is made on a variation account (typically decreases or other entries).
The sold entity's net equity value – amount prior to the assignment event (normal accounts).
The sold entity's net equity entries that were made when the event occurred (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Rows related to Goodwill loading. Goodwill loading is carried out because the assignment causes a reduction in the owner entity's percentage ownership of the owned entity. The system defines the Goodwill account (Normal and Variation) by calculating the amount to be loaded. This amount is equal to the value of the Goodwill from the journal times the variance in the ownership percentage. In case of event journals, this calculation takes account of all the goodwill present in that relationship's elimination journals (preceding the event). The adjusted variation account is the account dedicated to changes in the ownership percentage (reductions).
Capital gains/Capital loss account. The assignment of a share in the ownership of an entity may generate unbalanced entries, due to a positive or negative difference between the value of the financial investment sold and the net equity assigned. To balance the journal, the Capital gains/Capital loss account specified in defining the financial investment elimination logics from the ownership structure register. The value of that entry, attributed to the seller entity (i.e. the owner), equals the unbalanced amount (calculated taking account of all amounts on the financial investment, net equity and goodwill accounts in the journal) of the opposite sign.
Profit reversal reserve account on consolidation journals. This is the consolidation journals loading account present in the reversals rule associated with the process. The same amount calculated for the capital gain/capital loss entry is written off from the reversed reserves of the seller entity and reallocated to the sold entity for the purposes of fair distribution.

Partial disposal – control retained – Full goodwill

This type of event is used for assignments when these conditions are met:

The owner entity sells a share in the ownership of an entity that it controls.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership percentage.
The value of the decrease in the financial investment when the assignment is made.
The sold entity's net equity value – amount prior to the assignment event (normal accounts).
The sold entity's net equity entries that were made when the event occurred (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Goodwill account
Rows related to the group/minorities reclassification of Full Goodwill accounts
Capital gains/Capital loss account
Profit reversal reserve account on consolidation journals
Consolidation differences account

The system must reallocate the share of the Full Goodwill belonging to minorities to the Group. To calculate the amount to be reallocated, the system applies the event's percentage variance (event percentage minus previous event percentage) to the sum of the Group Full Goodwill and Minorities Goodwill accounts related to the previous event. The amount thus calculated is written off from the Group Full Goodwill account and attributed to the Minorities Full Goodwill account. Then an adjustment entry is generated on the minorities reserves (already present in the journal) for the same amount (Minorities reserve - Consolidation adjustments loading account present in the reversals rule associated with the process).

The system also adjusts the Goodwill account and the consolidation differences account by multiplying the percentage variance in the assignment event by the values of those accounts as at the previous event (load).

Lastly, the Capital gain/Capital loss (Consolidation rules – Configuration Rules – Deconsolidation folder) account is calculated by generating a balancing entry based on all the amounts on the financial investment, net equity and goodwill accounts within the journal. This entry is attributed to the seller entity.

Partial disposal – loss of control – Full goodwill

This type of event is used for assignments when these conditions are met:

The owner entity sells a share in the ownership of an entity over which it loses control after the assignment.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership percentage.
The value of the decrease in the financial investment when the assignment is made.
The sold entity's net equity value – amount prior to the assignment event (normal accounts).
The sold entity's net equity entries that were made when the event occurred (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows
Net equity elimination rows. The variation accounts dedicated to the incoming or outgoing change in the consolidation scope that derives from the new ownership percentage are adjusted.
Goodwill account
Rows related to the reclassification between of Full Goodwill accounts and the Goodwill account
Capital gain/Capital loss account
Profit reversal reserve account on consolidation adjustments
Consolidation differences account

The loss of control renders the full goodwill accounts (group and minorities) meaningless. CCH Tagetik therefore writes off the amounts on those accounts that are present in the journal and relate to the previous event (with control) by reallocating the entire amount to the Goodwill account. It does the same for the minorities reserve accounts and for account related to the consolidation difference.

Then it adjusts the Goodwill account by the assigned portion, calculated by multiplying the value of Goodwill as at the previous event by the percentage variance.

Lastly, the Capital gain/Capital loss account (specified when defining the financial investment elimination logics from the ownership structure register) is calculated by generating a balancing entry based on all the amounts on the financial investment, net equity and goodwill accounts within the journal. This entry is attributed to the seller entity.

Deconsolidation – no control – Full goodwill

This type of event is used for deconsolidation operations when these conditions are met:

The owner entity sells a share in the ownership of an entity over which it loses control after the assignment.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership percentage (zero).
The value of the decrease in the financial investment when the assignment is made (brought to zero).
The sold entity's net equity value – amount prior to the assignment event (normal accounts).
The sold entity's net equity entries that were made when the event occurred (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows, which write off the entire amount relative to the previous event.
Net equity elimination rows. The variation accounts dedicated to the change in the consolidation scope are adjusted, which, by virtue of the percentage variance, brings to zero all the existing accounts related to the previous event.
Goodwill account
Capital gain/Capital loss account
Profit reversal reserve account on consolidation adjustments

The system defines the Goodwill account (Normal and Variation) by calculating the amount to be loaded. This amount is equal to the value of the Goodwill from the journal times the variance in the ownership percentage. Given that the new percentage sets the previous value to zero, the loaded Goodwill equals all that the journal contains in relation to the previous event. The adjusted variation account is the account dedicated to changes in area (outgoing).

The Capital gain/Capital loss account (specified when defining the financial investment elimination logics from the ownership structure register) is calculated by generating a balancing entry based on all the amounts on the financial investment, net equity and goodwill accounts within the journal. This entry is attributed to the seller entity and also entails what was previously present in the journal being set to zero.

The same amount calculated for the capital gain/capital loss entry is also written off from the reversed reserves of the seller entity and reallocated to the sold entity for the purposes of fair distribution.

Given that this is a deconsolidation event, all entries generated by the system are intended to set the journal to zero.

Deconsolidation – with control – Full goodwill

This type of event is used for deconsolidation operations when these conditions are met:

The owner entity sells its entire share in the ownership of an entity that it controlled.
The group calculates the goodwill in accordance with the accounting standard IFRS 3 (Full Goodwill method).

The ownership structure register is fed as follows:

The new ownership percentage (zero).
The value of the decrease in the financial investment when the assignment is made (brought to zero).
The sold entity's net equity value – amount prior to the assignment event (normal accounts).
The sold entity's net equity entries that were made when the event occurred (variation accounts).

When an event of this type occurs, a journal comprising the rows listed below is generated in the currency of the buyer entity:

Financial investment elimination rows, which write off the entire amount relative to the previous event.
Net equity elimination rows. The variation accounts dedicated to the change in the consolidation scope are adjusted, which, by virtue of the percentage variance, brings to zero all the existing accounts related to the previous event.
Goodwill account
Rows related to the writing off of Full Goodwill accounts
Capital gain/Capital loss account
Profit reversal reserve account on consolidation adjustments
Consolidation differences account

The loss of control and sale of the entire shareholding renders the full goodwill accounts meaningless (group and minorities). Therefore, the system writes off the amounts on those accounts that are present in the journal and relate to the previous event (with control) by reallocating the entire amount to the Goodwill account. The system then calculates the amount to be loaded onto the Goodwill account (Normal and Variation). This amount is equal to the value of the Goodwill from the journal times the variance in the ownership percentage. Given that the new percentage sets the previous value to zero, the loaded Goodwill equals all that the journal contains in relation to the previous event. plus the portion of Full Goodwill that has just been reallocated. The adjusted variation account is the account dedicated to changes in area (outgoing).

The Capital gain/Capital loss account (specified when defining the financial investment elimination logics from the ownership structure register) is calculated by generating a balancing entry based on all the amounts on the financial investment, net equity and goodwill accounts within the journal. This entry is attributed to the seller entity and also entails what was previously present in the journal being set to zero.

The same amount calculated for the capital gain/capital loss entry is also written off from the reversed reserves of the seller entity and reallocated to the sold entity for the purposes of fair distribution.

Given that this is a deconsolidation event, all entries generated by the system are intended to set the journal to zero.