Consolidated Financial Statements Structures
📌 The lecture focuses on consolidated financial statements for complex holding structures, specifically moving beyond simple Parent-Subsidiary relationships.
🏢 Three main affiliation structures are discussed: Direct Holdings, Indirect Holdings (including Father-Son-Grandson and Connecting Affiliates), and Mutual Holdings.
📊 Direct Holdings can involve a single subsidiary or multiple subsidiaries (A, B, C) all reporting to the Parent company for one consolidated statement.

Indirect Holdings: Father-Son-Grandson Structure
➡️ In this structure, ownership flows sequentially (P $\rightarrow$ S $\rightarrow$ B), requiring calculation of indirect ownership percentage (e.g., $80\% \times 70\% = 56\%$ for P to B).
✅ A subsidiary is part of the group if the total direct or indirect ownership exceeds $50\%$.
❓ Non-Controlling Interest (NCI) calculations require careful separation of direct (e.g., $100\% - 80\% = 20\%$ NCI for P to A) and indirect components.

Indirect Holdings: Connecting Affiliates
🔗 This structure involves a subsidiary (B) receiving ownership from two paths: directly from the Parent (P $\rightarrow$ B) and indirectly through another subsidiary (P $\rightarrow$ A $\rightarrow$ B).
➕ Total control is determined by summing direct and indirect ownership percentages (e.g., $20\% \text{ direct} + 32\% \text{ indirect} = 52\%$ total control for P to B).
❗ NCI calculation must account for ownership shared with other subsidiaries (e.g., A owns $40\%$ of B, affecting the calculation of P's indirect NCI share).

Mutual Holdings (Parent Mutually Owned)
🤝 This occurs when the subsidiary holds shares in the parent company (e.g., Subsidiary S holds $10\%$ of Parent P, and P holds $90\%$ of S).
📉 Treasury Stock Approach: Shares held by the subsidiary in the parent are treated as treasury stock within the consolidated entity, and the subsidiary's investment account is eliminated against consolidated equity using its cost basis.
🧮 When ownership percentages are circular, iterative formulas are used to solve for the true realized income of each entity, incorporating both direct ownership and indirect ownership through the loop.

Key Points & Insights
➡️ Understand the difference between direct and indirect ownership when calculating control percentages in complex chains (Father-Son-Grandson structure).
➡️ For Connecting Affiliates, total control is the sum of ownership derived from all paths exceeding $50\%$ for consolidation inclusion.
➡️ In Mutual Holdings using the Treasury Stock approach, the subsidiary's investment in the parent is eliminated against consolidated equity, and the investment account uses cost basis.
➡️ In complex ownership loops, use simultaneous equations to accurately determine the *realized* earnings for P, S, and T before allocation.

📸 Video summarized with SummaryTube.com on Jan 13, 2026, 13:42 UTC