Complex+Group+Structure+-+Indirect+Subsidiaries (1)

In sub group should be the excluded in the group

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Unformatted text preview: to INCI share of GW in sub-group ii.e. Any GW attributable to the NCI in the sub-group .e. should be eliminated on consol. of P. This to ensure GW recognised in the ultimate P reflects This only its acquired interests in direct or indirect subsidiaries. Thus, additional adjustment needed: Thus, Dr NCI in financial position Cr GW on combination Cr RM60m RM60m Effective Acq Date in Indirect Sub (a) When ultimate parent co, acquires a direct subsidiary which itself owns a subsidiary acquired EARLIER (before the parent EARLIER acquisition) the effective date is the date effective parent acquires the direct sub Ultimate Parent P 1 Jan 2002 Direct Sub A 1 Jan 2001 Indirect Sub B Deemed Acq date? 2002 Effective Acq Date in Indirect Sub (b) If direct sub acquired interest in another AFTER PARENT ACQ, effective date is AFTER effective date the direct sub acquired the equity interest of another interest Ultimate Parent P 1 Jan 2002 Direct Sub A 1 Jan 2003 Indirect Sub B Deemed Acq date? 2003 Consolidation Techniques Consolidation 2 approaches: (i) Stage by stage (Multiple stage method) (i) (ii) One stage method (short cut method) (ii) Stage by stage Method Stage Prepare first sub-grp a/c at the lowest tier of the vertical Prepare structure Subsequently, consolidatn is repeated by progressg Subsequently, stage by stage upward until reaches highest tier of the grp grp GW – if any for NCI (at FV) – GW in sub-grp will be GW added on to the GW at the ultimate level without any adjustments adjustments GW – if no for NCI (at Net Assets) – at any subsequent at consolidation stage, any GW to NCI is excluded by: Dr NCI (in CFP) Cr GW on combination One Stage Method One Consolidatn adj made by ref to ultimate parent’s effective ownership interests in indirect subsidiaries subsidiaries Cost of investment match with ultimate parent’s Cost effective interest in the indirect sub effective Portion of cost att to NCI in immediate parent is Portion excluded and charged to NCI’s a/c excluded - this to ensure GW on consol only reflects ultimate parent’s proportionate share. ultimate refer to example 4.4, page 198, TLT, refer 6th edn Direct and Indirect Interest in Subsidiary Subsidiary Arise when ultimate parent and immediate Arise subsidiary both own shares in sub-subsidiary subsidiary e.g. Group Structure A P Bhd Q Bhd Parent -D 15% 75% R Bhd 75% 15% -InD - 45% 25% 25% - 15% 100% 100% NCI - D -InD Q Bhd R Bhd 60% Direct and Indirect Interest in Subsidiary Subsidiary e.g. Group structure B P Bhd Q Bhd Parent -D 30% 60% R Bhd 60% 30% -InD - 18% 40% 40% - 12% 100% 100% NCI - D -InD Q Bhd R Bhd 30% Direct and Indirect Interest in Subsidiary Subsidiary Acquisition at the same date Acquisition of sub-subsidiary at the same Acquisition date – merely combine interest of Ultimate in sub-subsidiary and interest of Immediate in sub-subsidiary Immediate GS A 15% + 60% = 75% GS B 30% + 30% = 60% Thus, control exists. Direct and Indirect Interest in Subsidiary Subsidiary Acquisition at different date GS A – R already controlled by Q at 60% GS ownership at the date of acquisition ownership Thus, the next 15% direct investment of P Thus, in R on later date is a CHANGE OF STAKE and treated as an equity STAKE transaction – i.e. no additional GW transaction refer to example 4.6, page 214, TLT, refer 6th edn...
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This document was uploaded on 09/23/2013.

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