Analyzing Investments and Noncontrolling Interest by Movement Code

Attached is the Parent Company with Investments by Movement Code report definition that is used in the above examples. This matrix report summarizes journal lines, and then groups data by cash flow code in rows, and by company and intercompany affiliate in columns. The report demonstrates the result when the cash flow code custom worktag is defined and added to the transactions and manual journals as described above. This report definition can be modified to include additional details to better fit your business needs, such as filtering by applicable ledger accounts or account summaries. Also attached is the Investments with Parent Company by Movement Code report definition which provides the same information, but displayed by intercompany affiliate and then company in the columns.

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Analyzing Investments - Monthly Process and Reporting Examples

Monthly Process

As part of the monthly process, run both the Equity Pickup and Noncontrolling Interest tasks. Workday recommends that you run the Equity Pickup task on all subsidiaries, associates, joint ventures, and third-parties. Run the Equity Pickup process first, followed by the Noncontrolling Interest task. 

For entries made to investment accounts other than equity pickup entries, ensure that you include a cash flow code. Examples include journals made for changes to initial investment amounts, dividends received, and partial divestitures. 

Reporting Examples

Here's the sample report output detailing the investment in subsidiaries, associates, and joint ventures by the cash flow code. Refer to the Report Details section below for the report definition and additional information.

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Analyzing Noncontrolling Interest - Monthly Process and Reporting Examples

Monthly Process

As part of the monthly process, run both the Equity Pickup and Noncontrolling Interest tasks. Workday
recommends you run the Equity Pickup task on all subsidiaries, associates, joint ventures, and third-party. Run the Equity Pickup process first, followed by the Noncontrolling Interest task.

Create manual journals for amounts affecting the noncontrolling interest owners equity. Journals include any changes to capital, dividend, and treasury stock accounts as examples. A cash flow code is included as shown in these sample journal entries:

Reporting Examples

Sample report output for details of the noncontrolling interest of the third-party companies by cash flow code. Refer to the Report Details section below for more information.

Analyzing Investments

Enables you to analyze investment ledger account movement by providing visibility into how or why investment balances change over time.

Worktag and Elimination Rule Configuration

Worktags

At a minimum, create these cash flow codes as a custom worktag, customizing them to fit your business movement descriptions. Note: You can also use movement codes with other worktag types such as Revenue Category or Spend Category; however, the examples in this article demonstrate use of these recommended cash flow codes:  

• Acquisition
• Divestiture
• Stock Issuance
• Dividend Received
• Dividend Paid
• Earnings in Associate/Joint Venture
• Earning in Subsidiary
• Unrealized Gain from Associate/Joint Venture
• Unrealized Gain from Subsidiary
• CTA (FX Reserve) from Associate/Joint Venture
• CTA (FX Reserve) from Subsidiary

 

Elimination Rules

Intercompany:

1. To ensure the proper elimination, define these ledger accounts referenced in the Equity Pickup Rules within an investment intercompany elimination rule: 
   • Investment
   • Profit/Loss
   • Provision
   • Ownership Change Adjustment 
2. Include the Equity ledger accounts where the parent company has provided an investment.

 

Noncontrolling Interest: No additional changes are required for the noncontrolling interest rule. For recommended best practices, refer to the webinars linked in the General Overview section above.

Equity Pickup:

1. For recommended best practices, refer to the webinars linked in the General Overview section above.
2. In elimination rules include the cash flow code (movement code) as a worktag to provide visibility into where the equity pickup is coming from.

Analyzing Noncontrolling Interest

Analyze ledger accounts movement of noncontrolling interest equity. Provides visibility into how or why NCI equity changed over time.

Worktag and Elimination Rule Configuration

Worktags

1. Create third-party companies as companies in Workday. Configure these companies with the company currency equal to the consolidation reporting currency.
2. Create a Noncontrolling Interest Companies hierarchy that includes all third-party companies.
3. At a minimum, create these cash flow codes as a custom worktag, customizing them to fit your business movement descriptions. Note: You can use movement codes using other worktag types such as Revenue Category or Spend Category; however, the examples in this article demonstrate use of these recommended cash flow codes:

• Acquisition
• Divestiture
• Stock Issuance
• Dividend Received
• Dividend Paid
• Earnings in Associate/Joint Venture
• Earning in Subsidiary
• Unrealized Gain from Associate/Joint Venture
• Unrealized Gain from Subsidiary
• CTA (FX Reserve) from Associate/Joint Venture
• CTA (FX Reserve) from Subsidiary

 

4. Create these statistic ledger accounts for third-party company analysis. Ensure that you use a separate balance sheet ledger account type of statistic. Follow the guidance provided in the webinars in the General Overview section and what's described in the Statistic Ledger Account vs Statistic Definition article. Note: You can modify the numbering and account descriptions to better fit your categorization structures.

Elimination Rules

Intercompany and Noncontrolling Interest rules: No additional changes are required. For recommended best
practices, refer to the webinars linked in the General Overview section above.

Equity Pickup: In elimination rules, include the cash flow code as a worktag to provide the visibility into where
the equity pickup is coming from. Examples of the special equity pickup rule for noncontrolling interest holders
using the third-party companies: