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If a parent company dispose of some Of share of subsidiary, then does the equity of parent company increases or decreases.
ThanksIt definitely decreases.
Suppose, parent co disposes 10% of equity of a Sub while it was previously holding 70%.
Now its equity on the sub will be 60% only.
In question 44 grange from Bpp why the working 12 says decrease in controlling interest in park while grange has acquired further 20% in park,same with working 13 as well.please clarify
I don’t have the question in front of me but are you sure it talks of an increase / decrease in “controlling interest” or is it an increase / decrease in “non-controlling interest”
If Grange, the parent, has acquired a further 20% of Park, that would be a decrease in the non-controlling interest
Was Park a subsidiary before this extra 20% was acquired? If so, then we need a calculation of the “Adjustment to parent’s equity” and where the cost of the additional 20% exceeded the value of the assets acquired (plus, if applicable, the respective value of the goodwill acquired from the nci) that would result in a decrease in the retained earnings of the parent because the nci has (effectively) made a profit on the deal and Grange has made a loss. But of course we should not refer to this as a “profit” / “loss” – it’s known as “an adjustment to parent’s equity”
Thanks mike looks like there is misprint grange was already having 60% of park then it further acquire 20% so even I was sure that should increase grange controlling interest in park. But the working said decrease in controlling interest in park so it confused a bit. Thanks
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