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when there is a step disposal in groups accounts, and the parents ceases to have control over the sub, there would be a calculation of gain/loss on disposal.
how would this be reflected seeing as there is no parent/sub relationship anymore? there is a parent/associate relationship now. does this mean they cease from preparing consolidated financial statements , so how would this gain/loss be shown?
Please HelpThe remaining holding (if any) is revalued to be held at fair value, and yes the associate will no longer be consolidated, but accounted for as any other associate.
The goodwill, net assets and NCI of the sub must be removed from the consolidated accounts, and the consideration received and fair value of the remaining holding added.
The gain/loss is calculated like this:
Consideration received + FV of remaining holding – (Goodwill at date of sale + FV of net assets of sub at date of sale – NCI at date of sale) = Gain if positive, loss if negative
You can also view this as:
Dr Consideration
Dr FV of remaining holding
Cr Goodwill
Cr Net Assets
Dr NCI
Dr/Cr Profit/Loss (balancing figure)thank you very much
but would these journals be shown in the parents financials or the groups up to date of disposal ?
so then they would stop preparing Consol. FS up to date of disposal.
i need closure
pleaseWell, there is no goodwill or NCI in the parent’s individual accounts is there? So these can only be in the consolidated accounts.
In the parent’s individual accounts the subsidiary will be held as a financial asset at fair value under IFRS 9. So the gain or loss is simply the consideration received less the carrying value.
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