CUSTOMER

How to configure Equity Pickup

SAP S/4HANA Cloud for group reporting

1 HOW TO CONFIGURE EQUITY PICKUP

Applies to:
This guide applies to the following SAP S/4HANA Finance for group reporting version:

• Version CE 2102
• Version CE 2105

REVISION HISTORY

Date Description
13nd of January Specify to CE only

Purpose:
This document was created to provide guidance on the procedure while configuring Equity
Pickup calculation in Group Reporting.

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TABLE OF CONTENTS
1. GETTING STARTED.......................................................................................................................... 4
1.1 Understand What’s included in CE 2102/OP 2020 FSP1 for EPU ................................................ 4
1.2 Understand What’s included in 2105/OP2021 for EPU ................................................................. 4
1.3 Decide on which calculation scenario is required for EPU ......................................................... 4
1.3.1 Where EPU entries should be posted? .......................................................................................... 4
1.3.2 Which currency amount should be the source of calculation? .................................................. 5
1.3.3 How will EPU entries look like? ...................................................................................................... 5
1.3.4 Does EPU need to be included in Consolidation process and be eliminated? ......................... 5
2. MASTER DATA PREPARATION ...................................................................................................... 5
2.1 FS Item ............................................................................................................................................... 5
2.1.1 Identify and create new FS Items that needed for EPU posting.................................................. 5
2.1.2 Maintain FS Item-GL account mapping if EPU will be posted to G/L ......................................... 6
2.2 Selection ............................................................................................................................................ 6
2.2.1 Selection for Ownership Percentage ............................................................................................. 6
2.2.2 Selection for Force Control ............................................................................................................. 6
2.2.3 Selection for Source data ................................................................................................................ 7
3 CONFIGURATION PROCEDURE ..................................................................................................... 7
3.1 Define Additional Fields for consolidation .................................................................................... 7
3.2 Document Type ................................................................................................................................. 7
3.3 Define General Setting for Equity Pickup ...................................................................................... 8
3.4 Define Posting Items for Equity Pickup ......................................................................................... 9
3.5 Define G/L Settings for Equity Pickup ......................................................................................... 11
4 EXECUTE EQUITY PICKUP ........................................................................................................... 11
5 SAMPLE CONFIGURATION TABLE -POSTING RULES .............................................................. 13

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1 BACKGROUND INFORMATION
Starting from S/4HANA Cloud 2102 Equity Pickup is available and can be configured via SSCUI to achieve
various calculation requirements. Additional enhancements are available in S/4HANA Cloud 2105.
With Equity Pickup, you can re-evaluate investments owned by a holding consolidation unit. Equity Pickup
(EPU) is used to adjust investments in the Balance Sheet of the holding consolidation unit to reflect the
current value of the corresponding share in the equity of the consolidation unit. This adjustment provides a
realistic picture of the value of the portfolio owned by the holding consolidation unit.

Help Portal documentation: Equity Pickup for SAP S/4HANA Cloud

2 GETTING STARTED
Before you start with the configuration, understand what’s available in S/4HANA Cloud 2102 and 2105.
There will be no standard content delivered for Equity Pickup. The calculation logic should be configured by
you from scratch as part of the implementation.

2.1 Understand What’s included in CE 2102/OP 2020 FSP1 for EPU

This includes:
• Equity Pickup core function
• Configuration menu
• Posting to Group Reporting
• Equity Pickup using the subsidiary's local currency as source currency
• Posting to a parent´s unit and translate from the subsidiary’s local currency (transaction currency)
into the parent’s local currency
Limitation:
• You cannot post to a non-Controlling parent as Partner Unit
• You cannot post to General Ledger
• You cannot use a group currency as source currency

2.2 Understand What’s included in CE 2105/OP2021 for EPU

This includes:
• Equity Pickup with group currency as source currency
• Equity Pickup with Non-Controlling parent in Partner Unit
• Posting to General Ledger
• EPU log file

2.3 Decide on which calculation scenario is required for EPU

2.3.1 Where do you want to post EPU entries?

Equity Pickup journals can be posted only in Group Reporting. The program will generate a Group Journal
upload template.

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Equity Pickup journals could be posted in General Ledger, then the program will generate a general ledger
journal upload template.
Both templates can be generated at the same time if it is required and configured accordingly.

2.3.2 Which currency amount should be the source of calculation?

By default, the local currency amount of the subsidiary is the source amount for the Equity Pickup
calculation. If needed, the group currency amount can be used as the source amount for the Equity Pickup
calculation. And Local Currency of Subsidiary or Group Currency for the version are the only two possible
options available right now on the currency/amount of the source data.
Configurations see 3.1

2.3.3 How will EPU entries look like?

Please refer to help document for some EPU posting examples EPU Calculations

2.3.4 Does EPU need to be included in the consolidation process and be eliminated?
In some cases, Equity Pickup is a standalone process for the parent company. However, in some countries’
accounting principle, Equity Pickup is a required step for consolidation. This means that the Equity Pickup
result will be included in parent company’s pre-consolidated trial balance then subject to consolidation
process, including currency translation, elimination, etc.

Note: Equity Pickup entries can’t be included in Activity Based Consolidation of Investment.

3 MASTER DATA PREPARATION

In general, please refer to Prerequisite for an introduction to the preparation list.

3.1 FS Item

2.1.1 Identify and create new FS Items that are needed for EPU posting
• FS Item for Source Data
Note: When Net Income is used for the EPU calculation, it would be optimal to use the calculated Retained
Earning account as a source.
• FS Item for destination posting
The FS Item role can be created and assigned to FS Items that will be used for posting.
Make sure that the destination FS items are assigned to the correct breakdown category to allow Partner
Unit, Subitem fields.
• FS Item for direct ownership
You can use the same FS Item which is used for the Consolidation of Investment to enter direct ownership
for Equity Pickup.
See example for calculation Approach 1 and calculation Approach 2 on how direct ownership should be
entered.
• FS Item for force control
A specific statistic FS Item can be used to indicate the controlling right of a parent within direct ownership
chain, especially if the controlling right is not consistent with the percentage of shares.
For more details, please refer to Control Indicator

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 2.1.2 Maintain FS Item-GL account mapping if EPU will be posted to G/L

If EPU journals will be posted in general ledger, then the initial EPU journals generated by FS Item will need
to be converted to the general ledger account. A mapping revision will be used to map the FS Item back to
the general ledger account. See 3.3 for configuration details.

3.2 Selection

3.2.1 Selection of Ownership Percentage

FS Item, unit of measure, document type or other restrictions defined in the selection will be used in the
configuration for Equity Pickup to read the direct ownership percentage to interpret the investment structure
and the ownership percentage.

Below you see an example for a selection.

3.2.2 Selection for Force Control

While the ownership information will be the main source for the program to derive the controlling right (who is
the controlling parent or non-controlling parent), you will have the chance to provide additional information to
overwrite the system logic.
By identifying the FS item, unit of measure, document type etc. in the selection, the program will use the
information provided in this selection to look for any exception required by the customer to correctly
recognize the real controlling parent.
For example, parent A owns the subsidiary B 90%, but does not have the controlling right. It should be the
non-controlling parent per the contractual agreement, then “Force control” will be needed to recognize A as
the non-controlling parent instead. For more details, please refer to Control Indicator.
While this selection is required to be maintained in the configuration, transaction data for selected FS Item is
not required. You don’t have to input any value for the FS Item used in the selection unless you really have a
requirement.
Below you see an example for a selection.

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3.2.3 Selection for Source data

A selection will need to be created to indicate the source data as a basis of each Equity Pickup posting rule.
FS Item, document type/posting level and other necessary information will allow the program to query the
right balance as subsidiary’s Net Income/Other Comprehensive Income balance for the period.

Sample selection:

4 CONFIGURATION PROCEDURE

4.1 Define Additional Fields for Consolidation

An additional characteristic set up in the “Define Consolidation Master Data Field” configuration activity will
be considered in the EPU posting.
There are two different scenarios of how this setting will impact the fields in EPU result:
• The field that is included in the Annual Net Income Calculation is considered in the Net Income type,
such as for example profit center and/or segment.
• All additional fields that are enabled in Group Reporting are considered in “Other Comprehensive
Income type”, if they are available in the records.

2.2 Document Type

SAP Best Practice content 1SG delivers document type 1E and 1U starting from CE 2102/OP 2021 FSP1.

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For existing customers who have installed an earlier version of the content, a new document type will be
created by the customer in the SSCUI(Cloud) or in the configuration activities (OP).

1E/1U document type in the content can be used as example below:

Note:
1E and 1U do not allow posting in group currency. According to the configuration discussed in section 3.1,
different document types should be created.

4.2 Define General Setting for Equity Pickup

In this step, you define the general settings for Equity Pickup (EPU) in your system. Each setting is defined
for a combination of a specific Consolidation Chart of Accounts and a specific Reclassification and
Elimination Special Version.
You must define the general settings before you start defining details for posting. Selections and thresholds,
which are defined in general settings, are shared by all the EPU rules that have the same version and chart
of account. You must activate Posting in Group Reporting to further configure the posting rule.

Activities
a. Specify the Consolidation Chart of Accounts and the Reclassification and Elimination Special
Version that the setting is applied to

b. Specify the Percentage of Ownership Selection and the Forced Control Selection to be used. These
selections enable the program to obtain ownership data and force control definition.

c. Select the options:

By checking the option “Read Group Currency Values, the EPU program will use the Group Currency
Amount from transaction data as transaction currency to perform EPU calculation. It will be translated into
parent company’s local currency when the result is exported for posting. When this option is checked, make
sure the document type used for EPU journals is defined to allow Group Currency. 1E/1U document types
from the content are created with the assumption without this option.
By checking the option “Record Non-Controlling Unit, in the line items for non-controlling interests calculated
by the EPU, the Partner unit field, will be the non-controlling parent. Otherwise, the default logic is to always
use subsidiary as the partner unit for EPU entries.

d. Specify the Percentage of Ownership threshold in percentages. These thresholds define a parent
company's controlling right over its investee.
Please refer to “Control Indicator” in the help document of Prerequisites

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 e. Activate Posting in Group Reporting and define the document type to be used for postings.
Based on your decision discussed in section 1.3.1 in this Guide:
If EPU journals will be posted to G/L, you do not need to activate this setting. While unchecking the “Active”
box, document types are not required to be defined.
If EPU journals will be posted in Group Reporting, check this box, then specify the document type that will be
used to post EPU. If EPU entries are not expected to flow into the consolidation process, then revoke
document type will be needed to general reversal entries to avoid disruption of consolidated result.

f.Specify the Exchange Rate Indicator used to translate value in transaction currency into value in
local currency.
Generally, exchange rate indicator A (average rate) is used. However, a different indicator could be selected
from the list per specific requirement.

4.3 Define Posting Items for Equity Pickup

You must define a detailed posting requirement in this step, no matter whether the posting is done in Group
Reporting or General Ledger. Make sure you create a specific configuration for each Reclassification and
Elimination Special Version.

Activities

g. Specify the following General Information for the configuration:

• Chart of Account,
• Reclassification and Elimination Special Version,
• Posting Item.
Note: The posting item can be a character or a number. It is shown in the Remark field in the journal entry
template to indicate the nature of each journal entry.
h. Select the Equity Pickup Type:
There are two Equity Pickup Types based on the different types of source accounts:
• N - Net Income and
• O- Other Comprehensive Income
Normally, both Net Income and Other Comprehensive Income changes will need to be picked up at the
parent company. So, there will be two posting rules for EPU for each version that requires an EPU
calculation. This is not mandatory; You will need to create the rule based on your business requirement. Only
Net Income or only OCI pick up is allowed in the system.
i. Specify the Source Data Selection ID
The Selection created in 2.2.3 is maintained in the configuration. Each type of Equity Pickup configuration should
have its own selection.
j. Specify the Destination FS Item Role, Subitem Category and Subitem for posting to a controlling
parent
There are two sections to define destination accounts for the controlling parent’s posting It is designed to
support a different posting approach than what is currently existing in the accounting practice.

Please refer to EPU Calculation Example with the two different approaches for EPU which is currently
supported.
In the Controlling Scenario,
• Destination is to define the accounts to pick up the subsidiary’s full amount of NI/OCI.

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 • Non-Controlling Destination is to define the accounts to record deduction of non-controlling parents’
share of subsidiary’s NI/OCI.
• “Plus” (+) “Minus” (-) in the header of each field just indicates the calculation logic: “Plus” means the
amount posted to this destination would be “source amount *1”, “Minus” means the amount posted to
this destination would be “source amount *-1”.

It means, for Gross Method, the accounts used in the section “Destination” and “Non-Controlling Destination”
under the Controlling scenario should be different. For example, the FS items in the destination usually
would be “Investment in Sub” and “Investment Income”; The FS items in the Non-controlling Destination
usually would be “NCI Expense” and “Other Assets”.

Configuration Example for Gross Method

However, Gross Method might not be the typical use case. For a typical use case, such as Net Method and
FS Item used in “Destination” section should be used in “Non-Controlling Destination” section to deduct the
non-controlling parent’s share into the same FS Item. Then aggregated, the Investment in the subsidiary will
reflect the controlling parent’s net share of the subsidiary’s NI/OCI.

Configuration Example for Net Method

k. Specify the Destination FS Item, Subitem Category and Subitem for posting to a non-controlling
parent
A similar configuration is needed for the non-controlling parent’s posting in non-Controlling scenario if this is
needed.
However, different from Controlling Scenario for non-controlling scenario, only the Net Method calculation is
supported.

Configuration Example for Non-Controlling Scenario

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4.4 Define G/L Settings for Equity Pickup

This step is required if you want to post to the General Ledger.

This step is configured per combination of Consolidation Chart of Accounts and Reclassification and Elimination
Special Version.
There will be two screens to be maintained ??? in the left dialog structure tree.
Under General Setting, you must activate the Posting to G/L option in this step. Upon checking the “Active” box in
the Posting in General Ledger section, you also need to specify the following:
• The document type for Equity Pickup to post in G/L
• The ledger group to post in G/L (optional)
• These settings are only used to generate the G/L posting template. EPU will not perform any validation
required to post to G/L. Upon uploading the template into general ledger, the posting function in G/L will
validate and decide how the document will be posted.
Under Mapping into G/L, you need to specify the Mapping ID and the Revision for the relevant G/L Chart of
Accounts. The Mapping ID and Revision is used by the system to map a FS item to a G/L account. It is
recommended to maintain specific mapping for Equity Pickup posting that is not assigned for data release. In this
mapping, FS Items have to map to General Ledger 1:1.

3 EXECUTE EQUITY PICKUP

The Equity Pickup Fiori app is the only app for executing the Equity Pickup calculation. The app is not
included in the default Fiori launchpad, but it is included in the security role of the Group Reporting
Accountant. You can either look up the tile by typing in “Equity Pickup” in the app´s search box,or add the tile
into your own user specific Fiori launchpad.

Sample execution screen for posting to Group Reporting only.

Please see below a sample screen for posting to general ledger. The posting date and the journal entry date
is needed to generate the journal template.

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The system generates two excel files which are saved to user’s local drive.
• Group Journal entries template/General journal entries template contains the posting details and can
be used to upload to group reporting/general ledger by using the “Import Group Journal Entries” or
“Upload General Journal Entries” app.
Sample Group Journal Template

Sample General Journal Template

• Log file
When Equity Pickup is executed, a new Excel log file named EPU_LOG_YYYYMMDDnnnn.csv will be
created.
For each pair of Cons Units and each posting item (Net income, OCI...), the log displays:
- The information used for EPU calculation: the source transaction data, ownership share %, forced
control
- The Journal Entry line items

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Sample Log file

5 SAMPLE CONFIGURATION TABLE -POSTING RULES

The table below is a configuration example for section 3.4.

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