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Hi AGain sir,
I have done most of the questions of the past exam papers but there hasnt been any question in which the in the vertical structure the last company is an associate of the subsidiary.Parent will abviuosly not control the last company beacuse it is not controlled by the subsidiary.Can you please tell me how to deal with such a question if it comes up in the exam.Verticles stuctures i have done are in which subsidiary has control on the sub sub so the parent also controls the subsub but are there are any other scenarios examiner can test us with like subsidiary has an accosiate of lets say 25% and parent also has lets say 25% or even 10 % of the subsub.I will be waiting for your reply.
Regards
I seem to remember a question which was a vertical group where the subsidiary ( not the sub-subsidiary ) had an associate.
The technique is to consolidate the parent’s share of the associate ie ( say ) 80% * 30%
Sir i wanted some help in dealing with the following situations..
1. A is parent Co.B is subsidiary of A with 60%.C is owned by B with a percentage of 20%.Now A also has 20%.Now effective interest of A in C will be 20% + 60% * 20% =32%.Now the parent does not own C how will we consolidate the results
Now as per the Answer you gave above in the BS we will not show Investment in Associate and only in the retained earnings we will include parents share and NCI will be 20% * 30% = 6%.Am i right in this.
Thankyou
The question is aimed at Mike but note that where there is no control, there is no consolidation and C is neither controlled by B nor A. It looks like and ordinary investment to me.
thanks Eva i understood that part 1 will not be consolidated in the parents results.But how will investment shown in the CFS will it be shown or not. and one more thing C co is the subsisiary of B Co on consildation wont it be shown on CFS.
First, C is not a subsidiary of B and will be in B’s fin stats as an associate.
Next, you would include A’s interest in C as an associate showing 32% interest ( I think! )
Thanks Mike Sir.I understood.
Eval Good luck for the Exam and Thankyou .(DOnt forget to wish me luck!!!!)
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