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Immediate consolidation

BHUPENDER (ca) (66 Points)

05 April 2012

Dear members

while consolidating one of the clients financials i came across the following problem

A ltd hold 99.02% of B ltd out of which 49.09% was acquired on 30th september with securities premium of rs 1000 crore and rest 49.93% was acquired on 20th jannuary . while preparing the analysis of profit on respective dates(30th sep and 20th jan) which amount is to be treated as pre and post .

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3 Replies

saikiran (CA) (96 Points)
Replied 05 April 2012

Dear Bhupender,

Please note the following (from the AS)

" If an enterprise makes two or more investments in another enterprise at

different dates and eventually obtains control of the other enterprise, the

consolidated financial statements are presented only from the date on which

holding-subsidiary relationship comes in existence. "

From the above it is clear that consolidation should be prepared from the date on which holding subsidiary relatio ship comes.

And subsidiary relationship comes when a company holds more than 50% shares

BHUPENDER (ca) (66 Points)
Replied 05 April 2012

Dear saikiran,

i am not confused on the matter that when to treat it as subsidiary . i am concerned that i have to consolidate the financials of A ltd so i have to calculate the amount of capital reserve/ goodwill for this we require to prepare AOP . Now while preparing AOP( i am talking about as on 30 september ) whether i should consider the securities premium balance as pre acq or post acqusition for the 49.09 % share of profit of the holding

saikiran (CA) (96 Points)
Replied 06 April 2012

Since consolidated financial statements are presented from the date on which holding subsidiary relation exists, all the profits & reserves of 49.09% will be of pre acquisition.