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sir why my previous one is closed now? 😀
1.regarding investment cost I got little confused sir. As far my understanding, parent company acquires subsidiary by acquiring their shares. right?
it means there is increase in share capital. why this is increase is not shown in journal of parent company?2. sir my next question is . At CSFP in balance sheet the share capital of parent is 80,000 and of subsidiary is 30,000 . In consolidation, we keep only of parent company. we don’t add of subsidiary. so does that mean 80000 of parent’s share capital already includes that acquired share capital of 30000 at CSFP?
3. sir why at acquisition and on CSFP ,there is no increase in subsidiary share capital? aren’t they allowed to issue new shares?
I am sorry sir if I asked completely stupid questions or irrelevant questions
1. I answered this before. They buy the shares from the existing shareholders, so it does not affect the total share capital.
2. This is answered in the lectures. The consolidated SOFP is showing the group as one big company that is owned by the shareholders of the parent company – it is only the share capital of the parent company that therefore appears. It is these shareholders who effectively own the group.
3. You are asking the same question as number 1 again. They are allowed to issue new shares but this will not happen in Paper F3.
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