Mid-year acquisition of a subsidiary — Accounting glossary

Consolidate the subsidiary’s income and expenses from the date control is obtained, not for the entire year. Determine acquisition-date net assets and post-acquisition movements using the information available, considering whether profits accrue evenly and adjusting for known seasonal or exceptional items. Calculate goodwill and non-controlling interest at acquisition using IFRS 3, and eliminate intragroup transactions arising during the consolidation period.

Worked example

A parent acquires 80% of a subsidiary on 1 July. The subsidiary earns $120,000 evenly during the calendar year. Six months of post-acquisition profit is $60,000 before consolidation adjustments; the parent’s share is $48,000.

Common mistake

Including all twelve months of subsidiary revenue and profit in group results, or time-apportioning an exceptional transaction that occurred before acquisition.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	FR	Direct	September 2026–June 2027
ACCA	SBR	Direct	September 2026–June 2027