DipIFR Syllabus D. Preparation of external financial reports - Full Disposal - Notes
Full Disposal
This is when we lose control, so we go from owning a % above 50 to one below 50 (eg 80% to 30%).
In this case we have effectively disposed of the subsidiary (and possibly created a new associate).
As the sub has been disposed of - then any gain or loss goes to the INCOME STATEMENT (and hence retained earnings).
Also, the old Subs assets and liabilities no longer get added across, there will be no goodwill or NCI for it either.
How do you calculate this gain or loss?
Proceeds | X |
Net Assets (100%) | (X) |
Goodwill | (X) |
NCI | X |
FV of the remaining % (if any) | X |
Gain/Loss | X |
What’s the effect on the Income Statement?
Consolidated until sale; Then treat as Associate (if we have significant influence) otherwise a FVTPL investment.
Show profit on disposal (see above).
Previous
Joint Ventures
Syllabus D. Preparation of external financial reports
D4. Business combinations – associates and joint arrangements
Next up
Subsidiary acquired with a view to disposal
Syllabus D. Preparation of external financial reports
D5. Complete disposal of shares in subsidiaries