Lecture_Topic_12_Indirect_Ownership_Interests

Lecture_Topic_12_Indirect_Ownership_Interests - Chapter 26...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 26 Consolidation: indirect ownership interests Prepared by Emma Holmes Consider the following group structure: P T S 70% 60% P controls S and S controls T S and T are both subsidiaries of P P would have to consolidate S and T into the one group NCI S 30% NCI T 40% Direct and indirect non-controlling interest
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This structure requires the recognition of: DNCI – direct non-controlling interest INCI – indirect non-controlling interest The interests of all parties in this group are summarised as follows: Direct and indirect non-controlling interest ST Parent Interest Direct Indirect Non-control Interest Direct Indirect Total ownership interests 70 % - - 42 % 30 % 40 % - 18% 100% 100% T is part of the “P Ltd Group” (and will therefore be consolidated), despite the fact that the total NCI in T is > 50% (it is 58%) This is because we use different rules to determine WHO to consolidate, as opposed to HOW to consolidate To determine WHO to consolidate, we must ask ourselves “who does P control?”. As P controls S and S controls T, then P controls both S and T. Therefore P should consolidate S AND T When it comes to HOW to consolidate, we need to recognise that P only has a 42% interest in T Direct and indirect non-controlling interest
Background image of page 2
Multiple pre-acquisition elimination entries NO change to format of consolidation journals re: BCVR pre-acquisition elimination elimination of intragroup transactions HOWEVER calculation of NCI share of equity changes for the “grandchild” subsidiary Impact of multiple subsidiaries (and INCI) on consolidation The major consideration in performing a consolidation with indirect non-controlling interests is to distinguish between: Pre acquisition equity of the subsidiary
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 11

Lecture_Topic_12_Indirect_Ownership_Interests - Chapter 26...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online