[shiridiprasad]

I think, the doubt was about why reduce finance cost of the subsidiary ?
Could you please explain who the subsidiary’s finance cost would get impacted, unless we are doing a consolidation.

[shiridiprasad]

I think even the risk and rewards have to be transferred to the Buyer.

[shiridiprasad]

That means, the parent company is transferring the shares it holds in a company to its subsidiary, now the subsidiary company shall own the shares in the company instead of the parent company and since the parent company controls the subsidiary we can say the parent company still indirectly through its subsidiary company holds the shares.

Hope the following example helps:
P (parent company), S( subsidiary company) X(company in which P has a shareholding).
P transfers shares held in X to S, now S is the shareholder in X.
Since S is a subsidiary of P, P has control over S, therefore indirectly holding shares in X.
From Consolidation point of view, P can still consolidate X if it can establish the existence of a control relationship between P and X or ever through the shareholding held by S, as its considered shares in X are still held by P but now indirectly.

Hope this answers you query.

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