Book Value method -common control companies
Posted: 07 Sep 2023, 19:45
Company A (our audit client) concerning its transactions in shares with common control companies applies the book value method :
If Company A purchases shares in a subsidiary/ associate from a common control company , these shares will be recognised at book value .
(value that the seller had in its books) .
DIfference between the book value and contract price is recognised through equity.
The same with the sale of the shares:
If shares are sold to common control companies , any gain or loss on sale is going again through equity.
Does anyone knows something about this method? Is this correct?
If Company A purchases shares in a subsidiary/ associate from a common control company , these shares will be recognised at book value .
(value that the seller had in its books) .
DIfference between the book value and contract price is recognised through equity.
The same with the sale of the shares:
If shares are sold to common control companies , any gain or loss on sale is going again through equity.
Does anyone knows something about this method? Is this correct?