Collapsing the parent company by distribution of shares

[Abe]

I would like to understand the accounting entries where
1. I distribute the shares of the parent company in exchange of shares of a subsidiary
2. How will I account for goodwill in the parent company
3. How can I avoid writing off the goodwill through income statement

 

[kirby]

This is an interesting transaction.
#2 - Parent has goodwill related to its acquisition of subsidiary. Goodwill has value only to the parent. If parent is gone then so is the reason for having goodwill as an asset. So logically goodwill is expensed. The acquiring subsidiary cannot logically say that it now owns goodwill in itself.
#3 I do not see a way to avoid goodwill writeoff since parent is gone and goodwill had a value only to the parent, no one else.

 

[bklynboy]

Can you elaborate what you mean by distributing shares of parent for shares of subsidiary? Since the parent already owns the subsidiary, I don't understand what is being exchanged? Is the parent increasing its stake in a company by issuing shares to the seller?

 

[Abe]

By distributing shares I mean, for the parent company to size it will give its shareholders shares of the subsidiary by distributing the shares through a dividend in form of shares rather than cash.