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Hello John,
P buys 80% of S.
P share capital is 3000 $
S share capital is 1000 $Why in the consolidated financial statement we do not add the 80% of S’s share capital, thus adding up to 3800$?
P has 3000 $ in share capital but also 80% of S. Therefore, the consolidated company should have share for 3800$, because when we buy part of company we do that through buying shares.
I know it is wrong, but I don’t understand why.
Thank you very much in advance!
The consolidated statements are prepared as though it is one big company. The people who control the ‘big company’ are the shareholders of P (they own P and P controls S).
You should watch our free lectures which go through all the rules and the logic behind them.
Sir, I have a general question.
Can a company issue bonus shares but ask the shareholders to partly pay for them?
Suppose a company issues 1000 shares at par ($1) and then makes a bonus issue 1 for 5 but asks the share holders to pay $0.1 for those shares?Is this scenario possible?
No – it would not then be a bonus issue 🙂
(And it would be a rather strange thing to want to do anyway 🙂 )
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