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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?



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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.



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