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Consolidation effect of increase in subsid capital

Effect on parent and NCI of an increase in sub share capital which affects % shareholding

I have a parent company (Company A) that owns 80% of a subsidiary (Company B).

During the year, company B issued £3.5m of share capital; this was taken up 85% by company A and 15% by the NCI. Net assets at the date of issue were £750k.

In company A, I reflected the investment as Dr Investment, Cr Cash £2,975k. In the company B, Dr Cash, Cr Share capital £3.5m.

When I’m doing my consolidation, so far in my consolidation adjustments I have Dr Share Capital £3.5m, Dr NCI £37.5k (5% lost x 750k), Cr Investments £2,975k, Cr Co A reserves £37.5k. 

1) is the above correct so far?

2) where does my balancing figure go in my consolidation adjustments and why?


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18th Jul 2018 05:09

You don’t say, or enable us to work out, how A’s percentage shareholding has changed. You say A “owns” 80%, but presumably that should be in the past tense. If not, what was the holding before the new issue? Whatever the actual numbers, you have an increase is A’s holding which you just treat as an incremental acquisition, which is what it is.

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