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Let’s say , A Co acquire 80% equity shares of B Co at 1.1.20X4 .B Co acquire 60% equity shares of C Co at 1.1.20X3 .
According the normal treatment , C Co will be treat as acquire at the same time where the A Co acquire B Co , which is date of acquire B Co 1.1.20X4 .( Effective interest in C Co 48% , NCI 52%,direct 40% , indirect 12%)
However, what are the consequences , in case C Co also hold 20% equity shares of B Co ?
will it effect the interest in B Co ?For instance , the interest in B Co will be 89.6% instead of 80%, since A Co have 48% effective interest in C Co and C Co hold 20% of B Co (48% X 20% = 9.6%)
or just ignore the 20% equity shares hold by C Co ?
Hi,
Do you actually envisage this situation arising? I doubt it would happen in the real world and if it doesn’t happen there then it won’t happen in the exam.
Thanks
In the real world , it still have the possibility the sub-subsidiary also own the shares of subsidiary , maybe it will not end up with 100% .( shares own by parent + shares own by sub-subsidiary )
However, what are the consequeses ,if this does happern ? Lets assume this does happern , but the C Co only own another 10% of B Co instead of 20% . ( more realistic )
Again, what are the treatment ? Ignore it or adjust the effective interest in B Co to 84.8% ( 48%x10%) ?
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