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Dear Mike,
What is the rationale/logic behind the deduction of the minority interest of the parent company share of the
consideration paid by the subsidiary for the subsidiary. e.g. Let say A acquired 75 percent of B which acquired 80 percent of C for 2MFair value of NCI …………..5m
Post acq share………………..1m
* Less………………………………(0.5) .25*2m
5.5
Thnxmy question has to do with the line that is asterisk
Because, by giving the nci (not “minority!”) their FULL percentage of the sub-sub, they are already being given their indirect share of the sub-sub’s assets. But that’s what the subsidiary bought when they acquired the sub-sub. So we have to deduct the nci’s share of the sub’s investment in the sub-sub – otherwise we would be double counting
Is that clear?
If not, post again
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