Disposal of a subsidiary in the cash flow statement
Report cash consideration received net of cash and cash equivalents disposed of as required by IAS 7, and provide relevant disclosures. Include the subsidiary’s cash flows in consolidated totals up to the date control is lost. Non-cash consideration is not a cash flow. A change in ownership while control remains is a financing activity under IAS 7, not the same as losing control.
Worked example
A parent receives $700,000 cash on selling a subsidiary whose cash balance at disposal is $80,000. The net investing inflow is $620,000, assuming no other related cash flows.
Common mistake
Reporting $700,000 without subtracting cash leaving the group, or treating a partial ownership change with control retained as the same disposal.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |