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giving away assets in exchange for equity interest

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › giving away assets in exchange for equity interest

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by Stephen Widberg.
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  • May 27, 2021 at 6:59 am #621875
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir i understand that when assets are contributed by entities in exchange for equity interest in Joint Venture or Associate, then the contributor recognises a portion of gain/loss accruing to other investors, in the contributor’s individual financial statements.

    case 1: However, what am not clear with is, when an entity contributes assets in exchange for a CONTROLLING stake in another company then how should gain/loss on transfer be recognised in the individual financial statements of the co which is intending to become parent? full gain/loss? or only NCI %?

    case 2: what about situation when a transfer is done in a joint operation? full gain/loss or only that accruing to other joint operators?

    May 27, 2021 at 2:56 pm #621918
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    1. Control – full profit or loss in parent’s FS.

    2. JO – consistent with JV.

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