Hi all,
Ive a doubt in Consolidation of group Financial Statements
Consider the following situation
A ltd holds 80% shares of B Ltd and Bltd holds 25 % of C Ltd. Now, A Ltd has significant influence (indirectly) in C Ltd and therefore C Ltd is an Associate of A Ltd.
How the equity method is to be applied here? For computational purposes Altd have and effective share of 20% in C's net assets (25%*80%). The balance 5% attributes to B's Minority Interest.
Should we apply the equity method in the Consolidated Balance sheet by applying 20% directly?
Or, should we find investment value of C ltd under equity method and total profits in B ltds books and then divide it into 20% and 5% between A Ltd and B's Minority Interest? (Like we do in consolidation of chain holdings of subsidiaries)
Pls reply
CAclubindia
