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GW in MI on Partial Transfer

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GW in MI on Partial Transfer

Postby Hot Asien Teen » Wed Feb 27, 2008 6:09 am

Hello oh wise ones.

Here is one that boggles the mind. The scenario is a bit complex, but bear with me. (SEM-BCS 6.0 Matrix COI transfer activity)

Companies P, A, B & U.

P is parent, owns 100% of B and 60% of A
A owns 80% of U,
B owns 20% of U.
So as a result, U is 92% owned by P.

We want to use the transfer activity, to move U up the hierarchy so it is owned by P. Our AFD is where the investment sits, and our equity comes in via RFD. So we have
one activity which is a total transfer of A's holdings in U to P, and
one activity which is a total transfer of B's holding in U to P.

The result should be that there is no more MI in U, as it is now 100% owned. However, we get MI, and GW in MI from this.

I think there are two potential problems,

1) We have annual impairment review of GW, so effectively it needs a manual journal to eliminate it. If we do a total divestiture, we have the option of reducing GW fully, with a transfer this option does not exist. Is this why the GW is there and wont eliminate?
2) We need a third activity which represents the increase of capitalization of U by P.

Or, we have missed the plot and there is something we are doing wrong. In any case the MI seems incorrect when we own 100%.
Electricity is actually made up of extremely tiny particles called electrons, that you cannot see with the naked eye unless you have been drinking.

Sometimes I think I understand everything, then I regain consciousness.
Hot Asien Teen
 
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