investment in associate - equity method

[ck8811]

Hi everyone,
I came across an accounting issue where the scenario is as follow :
company A (a company which hold shares in several pte ltd co and prepare consolidated financial statement) acquired less than 50% shares in company B, under ias 28 the company B is an associate, the treatment of co B will be cost of investment+post acquisition result in the consolidated statement of financial position of co A.
My question is if co B is also a holding company which prepare consolidated financial statement, should I use the group result or the company result of co B to calculate share of post acquisition result?

 

[ICAEW]

Logically speaking, the only reason Company A would acquire a holding in Company B (a holding company) is for the gains that B makes through its subsidiaries. Holding companies as such wouldn't be involved in trading etc. (therefore, holding) and could also be loss-making entities. So, assuming that the profits are transferred back to the holding company, it should be the consolidated results that should be used to calculate the post-acquisition share of profits from the associate.