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Consolidation of investment

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Praveen

SAP FICO Consultant

21 Points Posted on 27 July 2011

Hi,

Like to know the different methods available in Consolidation of Investment and calcuation of Non-controling Interest.

One of the scenario, in my current organization.

We have a Parent company P1000 and Subsidary companies S2000 and S2001

P1000 has invest different share percentages to develop the subsidary companies for ex

P1000 invest 56% on S2000

P1000 Invest 73% on S2001 etc..

P1000 is a listed company and subsidaries are not.

Now if i adopt a method for Consolidation of Investment it will be Equity method or Purchase method.

your help on this will be highly appreciated.

thanks and regards

Praveen.J

Replies (1)

CA Sachin Rastogi

Audit/IFRS Manager

264 Points Posted on 31 July 2011

Dear Praveen

Under IFRS, after 1Jan 2010, the acqusition method is applied for busines combinations and before 1 Jan 2010, purchase method is applied. The relationship of subsidiaries exists only when the controlling power lies with the parent company which is not clear in your question.

Equity method is applied in case of associate and joint venture which implies presence of significant influence or joint control.

Please let me know what exactly u want to ask.