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HELPPPP….. CAN ONE COMPANY TO BE SUBSIDIARY AND ASSOCIATE?

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › HELPPPP….. CAN ONE COMPANY TO BE SUBSIDIARY AND ASSOCIATE?

  • This topic has 0 replies, 1 voice, and was last updated 2 years ago by Syahi.
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  • December 5, 2020 at 3:08 pm #597764
    Syahi
    Member
    • Topics: 3
    • Replies: 0
    • ☆

    1 July 2019

    Kelemak Bhd was previously a rival company of Alor Bhd. Despite numerous economic downturns, the development of Kelemak Bhd outperforms Alor Bhd. Acknowledging that Kelemak Bhd may pose threat to Alor Bhd, the company acquired 60% of ordinary shares of Kelemak Bhd at a market price of RM2 each. The total consideration comprises of 90% cash and the remaining 10% in the form of Alor Bhd’s 6% Preference Shares. However, only cash transaction has been recorded.

    The total fair value of the net assets of Kelemak Bhd was RM88 million and included in this amount was a fair value adjustment of Kelemak Bhd’s non-depreciable land. This adjustment, however, has not been recorded. During the post-acquisition period, Kelemak Bhd has not issued any new shares.

    1 January 2020

    Alor Bhd decided to further acquire 20% of the ordinary shares in Kelemak Bhd for RM20 million cash.

    CAN ONE COMPANY TO BE SUBSIDIARY AND ASSOCIATE?
    It is because holding company who is Alor acquired ordinary share twicely . First, buy 60% > 50% but second year buy 20% < 50%.

    What is the effect?

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