ACCOUNTANT (Student) (559 Points)
21 September 2011Three companies A,B and C existed with B,C being the subsidaries of A independently.
A transfers some the shares held in C by it to B after 3 months from the start of a financial yr.
Now while calculating the cost of control of A on the Group,
will Dividend received by B for the pre-acquisition period of 3 months adjusted to the Cost of Acquisition?
(For the pre-acquisition period pertains to A which is its holding company....)
ACCOUNTANT
(Student)
(559 Points)
Replied 23 September 2011
Can no one from this clarify my doubt....??
ACCOUNTANT
(Student)
(559 Points)
Replied 24 September 2011
Can someone please look up at this query......i have no answer yet..??
ACCOUNTANT
(Student)
(559 Points)
Replied 28 September 2011
Omg....please can someone look up at this query.......its one of the questions troubling me.......
CA.Pravinchandra
(Executive (F&A))
(2387 Points)
Replied 29 September 2011
See..
As mentioned in As 21 while doing the consolidation the diffrence between the cost of investent and equity share is showned as Capital reserve or Goodwill.
Since dividend received by B ltd is for pre-aqusition period take it as Cost of aqusition and not consider in A ltd.
ACCOUNTANT
(Student)
(559 Points)
Replied 30 September 2011
But sir before B became a holding of C(as the shares transfered are more than 50%)
those shares were held by A which is nothing but a holding co. of B......
So indirectly the entire control is in the hands of A even before transfer to B or after........
Then how come it can be adjusted to the cost of acquisition of B before its consolidated.....
CA.Pravinchandra
(Executive (F&A))
(2387 Points)
Replied 30 September 2011
if You are doing consolidation of A ltd then, as you know A ltd can control C ltd indirectly.., take that Pre -aqusition devidend as part of equity (Capital reserve) and show in accordance equity method. Here while doing CFS of A ltd taking B ltd u should consider and make neccessary adjustment to minority of B ltd who holds in C ltd.
ACCOUNTANT
(Student)
(559 Points)
Replied 02 October 2011
Right sir......i got it.......thank you very much.............
CAclubindia
