Purchase of the shares of one entity, consolidation from equity method to full consoldiation.

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Leo
Posts: 145
Joined: 05 Apr 2020, 22:31

Purchase of the shares of one entity, consolidation from equity method to full consoldiation.

Post by Leo »

Hi,

I have one question. In case that our company holds 49,9% (consolidated under equity method) of the shares of another company, and we bought this year the rest of the shares (50,1%).

In the contract, the purchase price is 1,8 M€ with compensation for the future restructurations of 0,6M€, which led to a total consideration paid by us of 1,2M€ in cash.

My question is :
- At the statutory level, what's the book value of the shares to be booked by the holding? is it 1,8M€ or 1,2M€? If it was 1,8M€, where should I book the 0,6M€ of the compensation?
- At the consolidation level, I know that this is a purchase of one entity with a change in the consolidation method, with +/- profit from the selling of the 49,9% of the shares and purchase of the company at 100%€ with the calculation of the goodwill. Do I have to calculate the goodwill with consideration paid of 1,8M€ or do I have to calculate it with consideration paid of 1,2M€?

Thank you for your advice
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Marek Muc
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Posts: 1261
Joined: 15 Oct 2018, 17:21
Location: Warsaw, Poland

Re: Purchase of the shares of one entity, consolidation from equity method to full consoldiation.

Post by Marek Muc »

so you paid 1.2 million now, what are the future terms of this 0.6m compensation? i.e. will you have to pay it to the sellers if the restructuring is not carried out? will this amount change if the restructuring is more/less severe?
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