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Or eventually, Dr financial asset (for it will receive the shares in company C) Dr liability Eventually, the financial asset is fair valued, same as the financial liability, therefore, the effect of the financial assets cancel the liability so no P&L changes until the shares actually bought out?

Or
Dr other equity
Cr liability

I think this makes more sense

Company A and company B hold Company C (60% by A and 40% by B). What would be the accounting entries in company A, if company A has entered into an agreement with company B over the shares of C, if PBT of C reaches a certain level, then Company A is obliged to by 5% of company C at fair value at the...

How the shares will be valued?

You need to record the swap instrument as a derivative instrument, in accordance with IFRS 9. All the fluctuation in fair value is recognised in OCI.

sorry I read too quick, interest is also at the discretion of the issuer, yes, full equity I agree.

Similar to preference shares with principal at the discretion of the issuer and dividends are mandatory, They are not equity for the same reason.

my understand is that the principal is perpetual, but the interest is mandatory, so I don't agree with the assessment that it's an equity instrument, because for me it is a compound instrument, with equity being the residual value. because the principal is at the issuer's discretion but the interest...

you should follow the requirement of a cash flow hedge accounting.

Are you going to elect for hedge accounting?

So nightmarish that they deleted it?

many thanks Marek, do you have a more material one, with the whole PYA balance restated?

Hi,

I'm looking for some example of companies that have undertaken a PYA in their annual report. If you can think of any name, please share with me, thanks!

yes agreed, thanks!

If my description was unclear, I said, for D to keep its mino interests of 49% in B, but only sell C to A. I reckon that it's a legal question, but view is D cannot do so directly. It will need B to sell it's shares to A first.

I realized that this can only work by A buying the 70% of C from B. And then, D can get the benefit of a increased net assets in B. B can either distribute dividends to D or D can sell its shares in B. But it's not possible for D to only sell the 35% in C.

(1) If entity A pay cash to entity B to buy the 70% shares in C, and instruct B to do a dividend distribution, the result would be the same than (2) entity A directly paying B for the 35% worth. However, if route (2) is chosen, what would be the accounting in entity B as it will not receive consider...

Entity A has 65% interest over C and entity D has 35% interest over C. However, if entity A want to buy the 35% interests from D, to whom entity A should transfer the money? Should it buy the 70% shares in C from B and transfer the money to entity B which will transfer the money in relation to the 4...

if you have identified there are some intangibles, this will affect the goodwill.
similarly, if there are intangibles, NCI might have another fair value which may counterbalance the goodwill.

the above is a V0.

Parent A: Cash; 1100 Equity: 1100 Target: Net assets: 1000 Equity: 1000 Parent A subscribe for 1100 of the shares issued by the Target, existing shareholder will not participate and will lose majority. Parent A will hold 1100/2100=52.38% after issue. After issue: Target: Net assets: 2100 Equity: 210...

Whether you include it or not, it should not change your assessment of the goodwill. A PPA exercise should be performed.

Sometimes, the entity needs cash to grow and the existing shareholding can't put more cash into it, so it looks for external investors.

In this situation, you wouldn't get a goodwill, but depending on the percentage you acquire, you might end up with a bargain purchase.

Just moving it up in case.

Just putting this up the chain.

Based on IFRS 10 B91, IFRS 9 does not apply to interests in subsidiaries that are consolidated. When instruments containing potential voting rights in substance currently give access to the returns associated with an ownership interest in a subsidiary, the instruments are not subject to the requirem...

I think it all depends on what are you able to do as an investor, because sometimes, you just don't have the info, and it's too hard to do the adjustments (including for the prior years). I think you would need to agree with the auditors depending on the materiality of the investment. For example, y...

A strict application of a compound financial instrument would lead me to the journals on the right. However, I'm trying to find a economic rational.

In this case, the principal amount should be treated as equity and the PIK amount as liability. For example, a convertible prefs with principal amount of 1 million, paying a PIK cumulative interests of 10% every year. Principal convertible into fixed amount of shares and PIK amount into a variable a...

I think generally, CA of your jurisdiction tells you who needs to prepare group accounts and IFRS 10 what they contain. On that basis, if a company is exempt of conso by CA, then no further questions, this company do not need to do conso, and can apply ias 27 to its full extent. if a company is not ...

Make sense, same in France, the CA only gives guidance on exemptions in terms of group size.