SUBSIDIARY AND ASSOCIATE?

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?