Group Accounts- Disposals Flashcards
When do disposals in group situation usually occur?
Occur when the % of group holding in a group company reduces.
E.g. Parent company decides to sell some/all of their shares in a sub or associate.
Can disposal occur when a sub or associate issue new share? and why?
Yes, it can because the parent company could take up less than their proportionate rights, therefore overall group holding is reduced.
(the shares are diluted as more shares available)
This is called ‘deemed disposal’
When control is lost through selling all the interest in subsidiary
How do we account for this in IFRS 10?
Derecognize:
Asset and liabilities of the subsidiary
Goodwill in subsidiary
Non-controlling interest in the subsidiary
Recognize:
FV of the consideration received from disposal (proceeds)
Any group profit/loss on disposal and attribute this to the parent
When control is lost through selling all the interest in subsidiary
How do we account for this at the reporting date in CSOFP? IFRS 10
Disposed subsidiary is not consolidated
- remove goodwill related to the subsidiary
-Remove NCI related to the subsidiary
-Do not consolidate the assets and liabilities of the subsidiary
When control is lost through selling all the interest in subsidiary
How do we account for this at the reporting date in CSOCI? IFRS 10
Consolidate the results of the sub up to the date od disposal
report NCI of the sub up to date of disposal
Show group profit or loss on disposal of the subsidiary (In income statement)
Disposal of associates when parent sells all their interest in Associates
how do we account for this in CSOFP?
No equity from the associate: there is no investment in the associate shown in NCA
Disposal of associates when parent sells all their interest in associate
how do we account for this in CSOCI?
up until the disposal date(pro-rata), include:
- Share of profits of associate
- Share of OCI of associate
Show the group profit/loss on disposal of the associate (in the income statement)
