Disposal of subsidiary in parent's books and in consolidated book

Hi,

I was doing question 47 in BPP Exam kit (Kutchen) and there was an adjustment with the disposal of a subsidiary:”Kutchen had purchased an 80% interest in Niche for $40 million on 1 April 20X4 when the fair value of the identifiable net assets was $44 million. The partial goodwill method had been used to calculate goodwill and an impairment of $2 million had arisen in the year ended 31 March 20X5. There were no other impairment charges or items requiring reclassification. The holding in Niche was sold for $50 million on 31 March 20X5 and the gain on sale in Kutchen’s financial statements is currently recorded in other components of equity. The carrying value of Niche’s identifiable net assets other than goodwill was $60 million at the date of sale. Kutchen had carried the investment in Niche at cost”. There was 1 more related adjustment provided that the parent’s gain on disposal was recorded in Other reserves rather than RE.

My questions are

1. Is there a need to have a working to calculate group’s profit/loss on sub disposal in this case, if we are just concerning about the Balance Sheet consol? I don’t see a need for any adjustment made in group’s balance sheet except for a transfer of gains from other reserves to RE. The answer gave a full working on this so I am quite confused why they did that.

2. I am unclear how we can treat the original profit on sale (10m) in parent’s books in the consolidated statements. As in consolidation, we have a separate workings to work out profit/loss on disposal of the sub, I am not sure what will happen to the profit/loss that was already included in parent’s RE? If we have a consolidated income statement here, do we show both the parent’s gain on disposal + Group’s gain on disposal?

3. In this question, I see that Group’s profit/loss on disposal, plus current year impairment loss and post acquisition profit = exactly the profit on disposal in parent’s books = 10. Will such formula result in the same (equal) if this sub was not acquired at the beginning of the year, but was acquired several years before? (we will use accumulated impairment loss, accumulated post acquisition profit in such case?)

If that formula is correct, then does it mean we normally don’t have to adjust anything in Group’s balance sheet when there is a full disposal? Just take the parent’s RE as it is given?

4. What will be the treatments in this case if the investment was not held at cost, but held at FV instead? Lets say the investment on the face was held at 45m FV at date of disposal?

Greatly appreciate your help with my questions.