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
Which of the following is not a measurement issue in accouting a. when to record a business transaction b. how to classify the items of a businesss transaction c. when to classify

Acquisition during the financial period The holding company may acquire the subsidiary company partway through the financial period such that as at the balance sheet date, the

Sigma is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in year 2, $5,000 in year 3, an

Calculate the Return on Sales and Asset Turnover 1. Complete a trend analysis for the items below for the last three years using the earliest year as the base year. Cash


Requirements: a.   Record the following transactions in the journal of Howell Consulting. Explanations are not required. b.   Create T accounts for each transaction (Use the

Accounting policies Accounting policies are the specific assumptions, bases, principles and practices that are adopted by firms in preparing financial statements. The standard

Brabham Enterprises manufactures tires for the Formula One motor racing circuit. For August 2011, Brabham budgeted to manufacture and sell 3,000 tires at a variable cost of $74

Q. Evlaute Expected value of sales volume? (17500 × 0·3) + (20000 × 0·6) + (22500 × 0·1) = 19500 units Expected NPV = (((19500 × 1·35) - 10000) × 3·605) - 50000 = $8852 W

Resolution For Voluntary Winding Up A company may be put into voluntary liquidation: 1) By ordinary resolution: where any period fixed for the duration of the company has ex