DRS 27
Active
Proportionate consolidation – completing the full DRS 1–27 library
Anteilmäßige Konsolidierung
1
Scope – Elaborating §310's Genuine Election
The second of the three consolidation techniques, now fully documented
DRS 27 elaborates §310 HGB's own proportionate consolidation election for jointly-managed enterprises – established in the earlier HGB poster series as one of THREE major consolidation techniques (alongside full consolidation and the equity method), and genuinely notable for being an ELECTION rather than a mandate, unlike full consolidation's own compulsory application wherever control exists.
2
The Election Framework, Elaborated
Genuine guidance on the choice between proportionate consolidation and the equity method
Recall from the earlier HGB poster: a qualifying jointly-managed enterprise presents a genuine fork – proportionate consolidation under §310, or the equity method under §311/§312 (elaborated by DRS 26). DRS 27 provides detailed guidance on APPLYING the borrowed full-consolidation toolkit (§310(2)'s own "mit den erforderlichen Abweichungen" cross-reference) proportionately – capital consolidation, debt elimination, and profit elimination, all scaled to the joint venturer's own percentage share rather than the full amount.
3
Worked Example – Debt Elimination, Applied Proportionately
Eliminating intragroup debt at only the proportionate share
Recall the 50/50 joint venture example from the earlier HGB poster. The joint venture owes the parent €600,000 on an intragroup loan. The parent has elected proportionate consolidation, bringing in 50% of the joint venture's own line items.
Under DRS 27, the parent eliminates only its OWN 50% share of this intragroup debt – €300,000 – against the CORRESPONDING 50% of the joint venture's own receivable/payable already brought into the group accounts, rather than attempting to eliminate the FULL €600,000, which would improperly eliminate an amount exceeding what was actually consolidated in the first place.
4
Relationship to IFRS (IFRS 11)
Continuing the cross-library divergence flagged at the very start of this topic
Recall the genuinely notable three-way comparison this poster series flagged when originally covering §310: both HGB (via DRS 27) and ASPE (Canadian private-company GAAP) still offer proportionate consolidation as a genuine election for joint ventures, while IFRS 11 eliminated the equivalent option for genuine joint ventures in 2011, mandating the equity method instead – reserving proportionate-style treatment only for the narrower "joint operations" category. DRS 27's continued elaboration of a genuine, live election confirms this divergence remains fully operative in current German practice, even as IFRS moved decisively away from it over a decade ago.