Hi Friends

I want to know that if we consolidate the financials of Parent company with the subsidiaries then as per AS 21 what r the effects on Security Premium Account and how to calculate the G/w or C/R.

Thanks in advance

securities premium A/c will be shown as it is in the CFS, as other reserves are shown..

For rules regarding how to calculate G/w, C/r U have to study a chapter... this cant be answered briefly

Securities premium account is not affected with the consolidation jus we shown as it is in the consolidated balance sheet. The is a procedure for caluculating Either goodwill or capital reserve. The following...

Thats what we called it as Cost of Control.

First findout the cost of investments made in the subsidairy

Less:(-) Second find out is there any pre-qcuisition income or dividend

Less:Share in share capital of the subsidairy.

Less: Share in capital profits of the subsidairy.

At last u can find a + or - 

If it is positive the Goodwill

If it is negative then it is Capital reserve.

Thanku.

Vijay

Dear,

If Security premium relates to period before control establishes in subsidiary then if would be taken as part of Capital Profits in Analysis of Profits of subsidiay. Then after that percentage share of holding company in security premium would be reduced from Cost of Investments for calculating the Goodwill or Capital Reserve.

Now second thing if Security Premium is after the Control Established of Parent in Subsidiary then Share of Holding Company and Subsidiary should be seperately shown in Consolidated Financial Statements provided the Holding Company do not subscribe to those shares on which share premium is received by subsidiary.

If holding company has also subscribed those shares on which premium was paid then investments cost would be reduced accordinlgy.

With Regard

Sanjeev Kumar