Transitional relief when consolidation conclusion at the date of initial application is the same under IAS 27 (2012)/SIC-12 and IFRS 10 An entity is preparing its consolidated financial statements for the year ended 31 December 2013 and is considering the implications of IFRS 10 which is mandatory for these financial statements.. Under IAS 27 (2012)/SIC-12, an investee was not consolidated as of 1 January 2012. […]

Pooling of interests method restatement of financial information for periods prior to the date of the combination (2) Assume the same facts as in above, except that in this situation Entity A only acquired Entity C on 1 July 2012 (i.e. the transaction is still considered to be under common control at the date of Entity B “s acquisition of Entity C, but Entity B […]

Acquisition of a subsidiary that is not a business Entity A pays £160,000 to acquire an 80% controlling interest in the equity shares of entity B, which holds a single property that is not a business. The fair value of the property is £200,000. An unrelated third party holds the remaining 20% interest in the equity shares. The fair value of the non-controlling interest is […]

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 […]

Determining whether a decision-maker is a principal or agent (4)14 Assume the fact pattern and initial analysis in Example 7.28 above. However, in this example, the fund manager has a more substantial pro rata investment in the fund but does not have any obligation to fund losses beyond that investment. The investors can remove the fund manager by a simple majority vote, but only for […]