Deemed disposal
Assess the outcome by reference to control or significant influence after the transaction. If a parent’s percentage interest in a subsidiary falls but control is retained, the change is an equity transaction under IFRS 10. If control is lost, apply the loss-of-control accounting requirements, including measurement of any retained interest. The mechanics depend on the transaction, not the label alone.
Worked example
A parent owns 80 of a subsidiary’s 100 shares. The subsidiary issues 100 new shares to outside investors and the parent acquires none, reducing its interest to 40%. Whether control is lost requires analysis of the actual rights and circumstances.
Common mistake
Automatically recognising a disposal gain in profit or loss when the parent still controls the subsidiary, or presuming the new percentage alone settles the control assessment.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |