Company Hierarchy Changes in Consolidations Reporting

Posted Feb 21, 2018 Updated Jul 21, 2026 Posted by:

This guide provides a single currency example of subsidiaries being moved to a different parent company, within a different company hierarchy, in order to demonstrate how Workday handles these situations. Multi-currency situations are no different and can be recorded in either the parent or subsidiaries' base currencies.

Hierarchy Change Example: Effective September 1, 2016, Company C is moved to a new parent, Company E. The old parent was Company A.

Step 1: Complete a company hierarchy change with an effective date of September 1, 2016.
Step 2: Complete a company ownership change with an effective date of September 1, 2016.
Step 3: Complete company ownership change journal entries for both the prior parent, as well as the new parent.

Note: For hierarchy changes during the fiscal year, current year earnings in subsidiary—reported in the P&L—are reported with the old parent until the beginning of the new year, at which time they've been rolled into the retained earnings of the old parent.

For Prior Year Retained Earnings: When creating company ownership change journal entries, since the Prior Year Retained Earnings Account should not be changed, use an APIC (Additional Paid in Capital) ledger account for manual adjustments to equity.

Trial balance for the old parent before the hierarchy change:

Trial balance for the new parent before the hierarchy change:

Example of the journal entry needed for the opening entry with the new parent:

Example of the journal entry needed for the closing entry with the old parent:

Trial balance for the new parent after the hierarchy change:

Trial balance for the old parent after the hierarchy change: