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

To present consolidated exempted financial statements

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 70% Sub B = 41.7% 30% Sub C (21%) Continue… Continue… Parent or Ctrlg Interest A Bhd Direct 90% Indirect 90% x 40% Indirect 70% x 30% 70% NCI Direct (100% - 40% -30%) 10% Indirect 10% x 40% 30% x 30% B Bhd 70% - C Bhd 57% 57% 30% 30% 13% Continue… Continue… On the other hand, IF the group indirect interest is only 41.7%, the group as a whole can exercise 51% of the voting power in C via the shares held by A (30%) and B Bhd (21%). and For consolidation purposes, the effective For 41.7% indirect interest is to be used for the computing the shares of interest attributable to parent’s shareholders attributable IN SUM, when a P have an interest in IN subsidiary that has interest in another subsidiary, 2 types of NCI arise: Direct NCI Indirect NCI These NCI (Direct & Indirect) affect the These consolidation process, particularly in the calculation of NCI share of equity NCI Indirect Subsidiaries - GW GW The amount recognised for GW in the The ultimate parent’s group acc depends on it’s acctg policy for measuring the NCIs at acquisition date acquisition Measured at fair value Measured fair Measured at net assets Measured net Continue… Continue… NCI at FV GW would include a portion attributable to NCI GW as whole is recognised for each subsidiary, GW regardless whether it is direct or a indirect subsidiary subsidiary In a stage-by-stage consolidation, the GW in a In sub-group will be added on to the GW at the ultimate group level without any further ultimate adjustment adjustment Continue… Continue… NCI at share of net assets No GW attributed to NCIs Part of GW in a partially-owned sub-group Part effectively belongs to NCIs and must be excluded insofar a the ultimate parent is concerned concerned Thus, the GW in the ultimate parent’s group acc Thus, is not an absolute addition of the GW in the subis grp BUT should be proportionate to the parent’s grp effective indirect interest effective Continue… Continue… Thus, in vertical grp structure more complex in Thus, calculating goodwill BECAUSE calculating (i) sub-groups exist - they are not wholly owned by the parent - NCI share the GW although indirectly NCI (ii) For ultimate parent, > than 1 tier of GW on consolidation exists (iii) Controversial issue – What will be the GW on consolidation in ultimate What parent’s accounts : parent’s (a) An absolute addition of the individual tiers of GW?; OR GW?; (b) restricted to the proportions attributable to the parent’s effective indirect subsidiaries? parent’s Refer example 4.3, page 193, TLT, 6 t.h edn Continue… Continue… 2 views on recognition of GW if NCI at net views assets (refer e.g. 4.3): 1.Absolute addition 1. 150m + 120m = RM270m 2. The portion of GW in sub-group should be The excluded in the group accounts of the ultimate parent. Thus, GW of H Bhd ultimate 120m + (150m x 60%) = RM210m WHICH ONE SHOULD BE USED? Continue… Continue… No. 2 If NCI measured at Net Assets – no GW for NCI Thus, same applies...
View Full Document

This document was uploaded on 09/23/2013.

Ask a homework question - tutors are online