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Hi everyone,
I wanna to ask that if the parent disposes he subsidiary to associate or other investment, do we have to calculate the gain / (loss) on restatement on previously held interest (since we have to remeasure the remaining held interest to fair value) ? Just like what we have to do as in increase in interest. Or we just have to calculate the gain / (loss) on disposal?
If we are not required to calculate the gain / (loss) on restatement on previously held interest, may I know why? Because I saw the past year answers that we are not calculating it.
Thanks a lot.
You do not have “control” over the associate or other investment. You only use equity accounting to record associates. Therefore, selling a subsidiary to an associate means that the investment no longer belongs to the parent after the sale. You have to calculated the gain/loss on disposal.
The then subsidiary will no longer be an investment of the parent (not in the parent’s entity level balance sheet) nor part of the group (not in the consolidated accounts).
Suggest to post this question to “ask tutor” forum if you need further clarification.
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