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During the last three years Abey Berhad Co has held 300,000 ordinary shares in Bamee Berhad....

During the last three years Abey Berhad Co has held 300,000 ordinary shares in Bamee Berhad. The issued share capital of Bamee Berhad is 1,000,000 shares totalling RM500,000. The finance director of Abey Berhad is a director of BameeBerhad. Explain how the investment in Bamee Berhad should be treated in the consolidated financial statementsof Abey Berhad

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Answer #1

As per Provisions if A company holds more than 50% of Voting rights of another company then it will be treated as Subsidary.

% Holding by Abey Berhad in Bamee Berhad = 3,00,000/10,00,00*100 = 30%

So Investment in Bamee Berhad is an Investment in Associate

Treatment of Investment in Consolidated Financial Statement of Abey Berhad

The Abey Berhad company will show Investment of 5,00,000 RM * 30% = 1,50,000RM as Investment in Associate under Investments in Balance Sheet.

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