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SEM BCS COI

Hello,

This is w.r.t COI Funtion. Say Company A is holding 80% in Company B and Company B is holding 60% in Company C. Later in say after 3 months Company A directly acquires 15% in Company C. The treatment of acquistion is Direct shares.I have RE for PY and CY. The issue is when Company A acquires 15% in Company C, it should consider all its profits till date for arriving at GW / Negative GW. So even RE CY has to be included in first consolidation. But when it comes to B in case of C the RE CY is considered as subsequent consolidation.

And the issue is we cannot post any manual entires for RE CY as this is clearing item.So any thoughts on this?

Rgds

Sreekanth

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  • Posted on Sep 12, 2007 at 07:00 AM

    Hi Sreekanth,

    I might be wrong, but it looks to me that in case of acquiring of 15% of Company C, we have the EQUITY method, which doesn't require the GW calculation. What do you think?

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    • Hi Eugene,

      Thanks for the reply. Even if we use equity method, we need to calculate GW and this is offset against the Investment.

      I have an alternate solution but it has one disadvantage.

      I will crate one new FS Item (RE-Preacq profits).

      Post Company C RE - CY into this new FS item and add this in Location of values - Equity for first consolidation (in case Equity data is read from Total database).

      Based on this system will calculate GW/CR when A is acquiring 15% in C. And we need to post manually in Company B books for Minority Interests (MI).The disadvantage is that MI in Net Income will not match with Balance sheet MI. Hope I am correct.

      The same issue comes up even in case of step acqusition.

      Looking forward for comments / help.

      Rgds

      Sreekanth

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