Help Please

[NATASHA]

Can anyone please help me on a question on consolidated financial statememt of position, in this case there is one parent company but two subsidiary, the parent company acquires 80% of one subsidiary and 30 % of the second subsidiary, am not too sure how to deal with the second subsidiary as only 30% has been acquired

[Zbianca]

Hi,

The second subsidiary is actually an associate as the parent company has only acquired 30% of it.For a subsidiary to be an associate, the parent's undertaking should be less than 50%.

Hope this helps.

[NATASHA]

do you put the assets n liabilities of the associate in the consolidated sfp

[Suze]

hi Natasha

in the balance sheet you record under non-current assets (Investments) the total investment less any impairment

and in the Income Statement the 30% of profit or loss (30
% being your share in the associate)

Hope this helps

Suze

[NATASHA]

thxs a lot suze

[Admin]

thxs a lot suze


Please use the 'Thanks' button at the bottom of posts instead of making new posts.

[amritaki]

Subsidiary - is an entity, including an unincorporated entity such as a partnership that is controlled by another entity(parent)
Parent is an entity that has one or more subs.

Control is power to govern financial and operating policies of an entity so as to benefit from its activities.

Associate - is an entity in which the investor has significant influence and which in neither a sub. nor a J.V(joint Venture ) of the com.

Thus:: Subsidiary......................CONTROL
Associate......................SIGNIFICANT INFLUENCE

aSSOCIATE undertakings are NOT Subsidiaries.

Significant Influence is the power to participate in the financial and and operating policy decisions of an economic activity.

Subsidiary can usually be asumed to exist when the parent company owns more than 50% of the voting power of an entity. Sometimes control can exists with less than 50% voting power.

Associate is assumed to exist if the innvestor holds 20% or more of the voting power of the investee entity. Assumed NOT TO EXIST if voting power is less than 20% unless there is evidence to the contrary.

hope this clear it up!!
Amrita

[nana_asamoah]

absolutly true.

i will advice that solutions should be queit bellaborate so we can all follow.