Important points for holding company with subsidiary , Financial Accounting

Important points for holding company with subsidiary

The following points are important:

1) The first approach is to determine the effective shareholding by the holding company and Minority Interest  in the sub-subsidiary company.

For the holding company the effective shareholding is given as:
80% x 75% = 60%

and the minority interest will be computed in 2 stages: - i.e.

Direct minority interest (100% - 75%) = 25%
                        TOTAL Minority interest = 40%

Indirect minority interest (20% x 75%) = 15%

2) Care should be taken when computing goodwill. The following approach will normally be used:

If the holding company acquired the subsidiary company after the subsidiary company has acquired the subsidiary company, the goodwill can be computed as a combined figure and the profit and loss and capital reserves on acquisition of the subsidiary company will be on the same date the holding company acquired subsidiary company.

If the holding company acquires the subsidiary company and thereafter the subsidiary company acquires the sub-subsidiary company then goodwill should be computed in two stages i.e. At the point when the holding company acquired subsidiary company and on the date when the group acquired the sub-subsidiary company.

Posted Date: 12/12/2012 4:36:30 AM | Location : United States

Related Discussions:- Important points for holding company with subsidiary , Assignment Help, Ask Question on Important points for holding company with subsidiary , Get Answer, Expert's Help, Important points for holding company with subsidiary Discussions

Write discussion on Important points for holding company with subsidiary
Your posts are moderated
Related Questions
zorn conducted his professional practice through zorn, inc. the corporation uses a fiscal year ending september 30 even though the business purpose test for a fiscal year cannot be

Legal Aspects There is no law relating to branch accounts but examination problems under this heading are frequently linked to either partnership or company account problems. Ans

Let us assume you expect to obtain Rs.2000 yearly for the next three years. The receipt of Rs.2000 is evenly divided. One part that is: Rs.1000 is obtained at the beginning of the

Conversion of members' to creditors' winding up If the liquidator in a members' winding up forms the opinion that the company will not be able to pay its debts in full within t

The Schrödinger Science Store operates a retail store in a local shopping mall.The results of operations for the fourth quarter of 2011 are as follows: Sales

The time t= 0 continuously compounded term structure of interest rates is given by R(0 , T) = 0. 05 - 0. 005 e - 0.10 T . Find the price of a Treasury bond with exactly 3

You have been hired as consultants to advise Mr D of DN Company limited on the performance of his company which has been  in business for two years. He has provided you with a subs

Which of the following events would be recorded as an accounting event? Answer   a. A guest purchases a meal in a food outlet.

According to the Solow model, how would each of the following affect consumption per worker in the long run (i.e. in the steady state)? Draw a figure and explain. a. The destruc