Disposal of Subsidiary

All topics related to IFRS Standards.
Post Reply
SaadOlath
Posts: 53
Joined: 22 Dec 2019, 10:50

Disposal of Subsidiary

Post by SaadOlath »

Please consider the below scenario:

Parent A owned 100% equity share in its Subsidiary.

In the book of the Parent, investment in Subsidiary was USD 100,000.

Parent has disposed its Subsidiary for USD 150,000. Therefore, a gain of USD 50,000 has been recognized in P&L of the Parent.

Share Capital of the Subsidiary is USD 100,000
Retained earnings is USD 5,000.
Profit for the period is Nil.
There's no goodwill.

Please advise on the accounting treatments in the consolidated SOPL and SOFP?
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Disposal of Subsidiary

Post by JRSB »

Did you set up the subsidiary from scratch. If not what was the retained earnings at acquisition.
Jonny
Posts: 90
Joined: 22 May 2020, 11:09

Re: Disposal of Subsidiary

Post by Jonny »

What do you mean by SOLP and SOFP?
Thanks
SaadOlath
Posts: 53
Joined: 22 Dec 2019, 10:50

Re: Disposal of Subsidiary

Post by SaadOlath »

Subsidiary set up from scratch

Sopl - st of profit or loss
Sofp - st of Financial position
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Disposal of Subsidiary

Post by Marek Muc »

it doesn't matter what the amounts are in standalone accounts of the parent

in consolidated FS, you need to derecognise all assets and liabilities (incl. goodwill, fair value adjustments etc)

https://ifrscommunity.com/knowledge-bas ... of-control

in your case it seems that the gain will be 150 k (price) less 95 k (net assets disposed)
Post Reply