ACCA SBR UK Syllabus D. Financial Statements of Groups entities - Partial Disposals - Notes 21 / 34
Partial Disposals
A partial disposal means selling but keeping control - so we must keep above 50% ownership afterwards e.g. Selling from 80% to 60%.
As we keep control, then the sale must be to those who do not have control - the NCI.
NCI will therefore increase after a partial disposal.
Therefore, this is just an exchange between the owners of the business (controllers and non-controllers) and so any gain or loss must go to EQUITY (other reserves) not Income statement.
How is the gain or loss calculated?
Proceeds from the disposal | x |
Increase in NCI | (x) |
Difference to Equity | x |
How do you calculate the ‘Increase in NCI’ line?
Goodwill | x |
Net Assets (from Equity table) | x |
x % disposed | x |
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What is the double entry for the disposal?
Dr Investment in S(as this is where it was originally credited to) | X | Proceeds |
Cr NCI | X | Increase in NCI calculated |
Dr / Cr Other Reserves | X/(X) | Difference |
What is the Income Statement Effect?
The subsidiary is still consolidated in full.
NCI % is time apportioned (eg 20% to date of disposal, 40% thereafter).
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Syllabus D. Financial Statements of Groups entities
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