What will be the accounting treatment for transfer of stock ownership from intermediate holding company to ultimate parent for NIL consideration? Will there still be goodwill recognition? E.g. Entity A owns Entity B and Entity B owns Entity C. Entity B transfers its ownership of Entity C stocks to Entity A. This means that the ultimate beneficial owner will not change except that the structure will change since Entity B will already be out of the picture.
Transfer of Stock Ownership
Answers
Not my strong suit, but I'll give this a stab:.
Nothing changes at the "C" Entity, except changing the name of who owns the stock. There was no financial consideration in the transfer.
Between "B" and "A" there would be a financial transaction based on the value of the stock transferred (at a minimum, book value). Probably handled thru an intercompany account.
There could also be a valuation adjustment.
Best bet is talk to your CPA advisory/tax or auditing firm for the best treatment based upon not only exactly how your set-up but tax treatment.