COMMERCE 4AC3 Chapter 8: Ownership Issues
11 Apr 2018
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The parent purchases additional holdings in its subsidiary. The parent sells some of its holdings in its sub. Sub issues additional common shares to the public and parent does not maintain its previous ownership percentage. The sub repurchases some of its common share from the non-controlling interest. When parents ownership changes, % of sub"s common shares held by the nci also changes. The major consolidation problem involved with ownership changes is the effect such changes have on the valuation of subsidiary net assets and non-controlling interest in the consolidated statements. When parents ownership % increases, a portion of the unamortized acquisition differential will be transferred to from the parent to nci. Subsidiary is measured at fair value on the consolidated balance sheet on the date the parent obtains control. Anytime parent"s % of ownership increases, account for it as a purchase; if parents% ownership decreases, account for it as a sale.
