Entity with a venture capital organisation segment Bank A has a number of separate activities. One segment”s business is to acquire all the shares of companies which are then partially sold down to third-party investors. Bank A retains a portion of the shares as a co-investor and has significant influence, but not control, until the investment is exited. Bank A considers these activities to be […]

Disposal of a subsidiary A parent sells an 85% interest in a wholly owned subsidiary as follows: after the sale the parent accounts for its remaining 15% interest as an available-for-sale investment; the subsidiary did not recognise any amounts in other comprehensive income; net assets of the subsidiary before the disposal are $500; cash proceeds from the sale of the 85% interests are $750; and […]

Reclassification of other comprehensive income A parent sells a 70% interest in a 90%-owned subsidiary to a third party. The subsidiary had recognised, in its own financial statements, the following: a revaluation reserve in respect of property, plant and equipment of €2 million; a surplus on available-for-sale investments of €3 million; a cumulative actuarial loss of €1.5 million; and a cumulative translation difference of €4 […]

Deemed disposal through share issue by subsidiary A parent entity P owns 600,000 of the 1,000,000 shares issued by its subsidiary S, giving it a 60% interest. The carrying value of Ss net identifiable assets in the consolidated financial statements of P is £120 million. P measured the non-controlling interest using the proportionate share of net assets; therefore the non-controlling interest is £48m (40% of […]

Determination of the gain or loss on the partial sale of an investment in a single-asset entity A parent M owns 100% of a single-asset entity (SAE). The parent M sells 60% of its stake in its subsidiary to a third party X and as a result loses control of SAE. This is illustrated in the diagrams below. Scenario A: Parent M retains a joint […]

Reattribution of other comprehensive income upon an increase in ownership interest A parent holds an 80% interest in a subsidiary that has net assets of ¥4,000. The carrying amount of the 20% non-controlling interest is ¥800, which includes ¥200 that represents the non-controlling interests share of total other comprehensive income of ¥1,000 related to gains on available-for-sale investments. The parent acquires an additional 10% interest […]

Reallocation of goodwill to non-controlling interests A parent pays €920 to acquire an 80% interest in a subsidiary that owns net assets with a fair value of €1,000. The fair value of the non-controlling interest at the acquisition date is €220.   Share of net assets Cm Share of goodwill Cm  Total Cm Parent 800 120 920 Non-controlling interests 200 20 220   1,000 140 […]

Initial measurement of non-controlling interests in a business combination (2) Method 3 Qualifying non-controlling interests are measured at proportionate share of identifiable net assets net of other components of non-controlling interests The non-controlling interests are measured as follows: £m £m Fair value of identifiable net assets 850 850 Goodwill (E950 — (80% x €850)+ E25) 295 290 Cash 950 Non-controlling interest (20% x €850 + […]

Put option and gaining control accounted for as a single transaction Entity A acquires a 60% controlling interest in listed Entity B. As it has obtained a controlling interest in B, the regulator requires A to offer to purchase the remaining shares of B from all other shareholders of B, paying the same price per share as in the transaction in which A obtained control […]

Accounting for the non-controlling interests share of losses previously allocated to the parent Parent A has an 80% interest in subsidiary B, which it acquired in 2000. At 31 December 2009, the subsidiary had net negative equity of $100, therefore, the carrying amount of the non-controlling interest at that date was $nil. Under IAS 27 (2007), the deficit of $20 attributable to the non-controlling interest […]