Holding company with a direct shareholding in sub-subsidiary companyUnder this type of structure, both the holding and subsidiary company have some shareholding in the sub-subsidiary company. The consolidation process will also remain the same as the second type of structure only that this time care should be taken in dealing with the following items.1) The effective shareholding of the holding company will now be both direct and indirect. E.g. assume the following structure.
The same approach will be used as that of the previous structure. The following additional points need to be considered:2) On the debit side of the cost of control, the investment in subsidiary and sub-subsidiary will appear as follows:
3) The proposed dividends in sub-subsidiary company may also require a different accounting entry and this is because the holding company will now receive its share.
Two entries may thus be necessary and these are:DR. Group proposed dividends (with holding company’s direct share in proposed dividend of ss) CR. Group retained profitsDR Group proposed dividends (with subsidiary company share of the proposed dividends in sub-subsidiary) CR. Group retained profits (with holding company’s indirect share for proposed dividends in sub-subsidiary) CR. M.I (with Minority interest’s indirect share of proposed dividends in subsidiary)