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Dilution/Acretion of interest in subsidiaries (without a loss of control)

Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Dilution/Acretion of interest in subsidiaries (without a loss of control)

  • This topic has 0 replies, 1 voice, and was last updated 7 years ago by stacky.
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  • October 22, 2017 at 1:19 am #412810
    stacky
    Member
    • Topics: 2
    • Replies: 27
    • ☆

    Hello Everyone, hope someone can help for the below.

    Scenario : Company A owns 70% B . Company B owns 100% C, Company C owns 100% D,E,F

    Company C issues new share capital to be fully taken up by Company A.

    Ultimate outcome is Company B owns 55% of C, Company A owns Direct 45% of C.(Total effective interest will be 83.5%)

    There will be 2 equity adjustment here as C is still a subsidiary of B and A, before and after the new share capital.
    1 for Company B and 1 for Company A,

    My question is, when we do equity adjustment for Company B, do we only consider the Net asset of Company C, or do we have to consider the consolidated financials of Company C? (Which considers C,D,E,F)?

    Then for the case of Company A, do we use the “effective” ownership interest in determining the decrease of NCI? IE : Before it was 70% ownership in C via indirect ownership, now its 83.5%?

    Hope my question is not too confusing lol

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