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Hi dear Mike
I cannot understand the logic/concept of IHA. Pls explain me in simple language why we account for only parents share of cost of subsub to subsidiary?
You’re going to have to help me here! Which IHA do you want me to explain?
Is it:
Integrated Healthcare Association
Indicators of Hydraulic Alteration or
International Hydropowers Association(I assume that it’s not the International Housewares Association)
Owhh sorry for that!
Indirecto Holding Adjustment (when calculating goodwill for SubSub from perspective of Parent)
AHA! You really don’t have to check far down this page to find exactly the same question so I’m going to ask you to do that.
Then, if you still have a problem, come back to me
The amount attributable to the parent of the subsidiary’s investment in the sub-subsidiary is surely the percentage owned by the parent in the subsidiary.
As the subsidiary acquires assets, those assets (obviously) belong to the subsidiary but the owners of the subsidiary are (say) 70% the parent and 30% the nci
So when the subsidiary spends money acquiring assets of, say, $5,000 the cost to the parent is 70% of $5,000 ie $3,500
Logical enough?
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