hi,
on disposal of subsidiary shares without loosing control ,if we had a gain we,
dr bank
cr nci
cr reserve
it seems like we are treating it as unrealized gain as we do not take it into the profit/loss a/c
and also cr reserve instead of retain earning.
it is a realized gain just like other disposals as we have actually receive cash , not just paper gain....then why the treatment of unrealized gain just like revaluation gain?
Gain or loss on disposal of subsidiary net asset (step disposal)
5y ago#1Hi,
Think of it as a reserve transfer in the group accounts, similar to that seen when transferring some of the revaluation surplus to the retained earnings.
In the individual accounts there would be a profit or loss on disposal as we have sold shares. In the group accounts there is just a change in ownership, so no profit or loss as there is no disposal of shares in the group, just a transfer of the amounts of the net assets owned. The transfer of ownership therefore takes place in the group SOCIE.
Hope that clears it up.
Thanks