Subsidiary acquired with a view to disposal

NotesQuiz

Subsidiary acquired with a view to disposal

A subsidiary that is acquired exclusively with a view to its subsequent disposal is  classified on the acquisition date of the subsidiary as a non-current disposal group 'held for sale' (if it is expected that the subsidiary will be disposed of within one year and the other IFRS 5 criteria are met with within three months of the acquisition date)

Classification as a discontinued operation

A subsidiary classified as 'held for sale', is included in the definition of a discontinued operation, with treatment as follows:

  • Income statement

    Single Line “Discontinued operations” - PAT of the Sub + gain/loss on re-measurement to held for sale

    The income and expenses of the subsidiary are therefore not consolidated on a line-by-line basis with the income and expenses of the holding company.

  • Statement of financial position

    The assets and liabilities classified as 'held for sale' presented separately (the assets and liabilities of the same disposal group may not be offset against each other). 

    The assets and liabilities of the subsidiary are therefore not consolidated on a line-by-line basis with the assets and liabilities of the holding company.

  • Statement of Cashflows

    No need to disclose the net cash flows attributable to the operating, investing and financing activities of the discontinued operation (which is normally required) but is not required for newly acquired subsidiaries which meet the criteria to be classified as 'held for sale' on the acquisition date

NotesQuiz