Free Subsidiary from controlling shareholder
Posted: 22 Nov 2020, 02:51
Usually investment in subsidiary is the purchase consideration, paid to acquire a Subsidiary.
What if, the Subsidiary was gifted by the Ultimate Shareholder?
At Consolidation level, Investment in Subsidiary is usually offset against Share Capital of the Subsidiary. Therefore, I believe that investment in Subsidiary cannot be Nil, even, if no consideration has been paid. Otherwise, you will get a - ve figure, when offsetting Investment in Subsidiary against Share Capital of Subsidiary.
Several auditors maintain that Investment in Subsidiary value should be Nil, bcz, no consideration was paid.
Idk, if there's any guidance from IFRS.
Please advise?
What if, the Subsidiary was gifted by the Ultimate Shareholder?
At Consolidation level, Investment in Subsidiary is usually offset against Share Capital of the Subsidiary. Therefore, I believe that investment in Subsidiary cannot be Nil, even, if no consideration has been paid. Otherwise, you will get a - ve figure, when offsetting Investment in Subsidiary against Share Capital of Subsidiary.
Several auditors maintain that Investment in Subsidiary value should be Nil, bcz, no consideration was paid.
Idk, if there's any guidance from IFRS.
Please advise?