23 January 2023
B ltd is subsidiary company to A ltd and C ltd is associate to A ltd. B ltd has disposed a business unit under demerger to C ltd. now C ltd as purchase consideration issued its shares directly to share holders of B ltd. Since A limited is also share holder of B ltd it received shares of C ltd. Now what is the accounting treatment for the transaction in the books of A limited?.
Note: A ltd has recorded investment in subsidiary company B ltd at cost. Therefore there will be no change in value of investment of B ltd in the Books of A ltd after Demerger. But A ltd will receive shares of C ltd the resulting company.
29 January 2023
sir, how will A pass its investment to C? what I stated is there is demerger between B and C and as a consideration C ltd allotted its shares to shareholders of B ltd. Since A ltd is also shareholder of B ltd , shares of C ltd will be allotted to A ltd and A ltd recorded investment in B ltd at cost. so there is no scope of changing its value. Now how to bring shares of C ltd in to books of A ltd.