BUCC - Subsidiary merged into parent

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marea
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BUCC - Subsidiary merged into parent

Post by marea »

Hello everyone,

I have a question. In a scenario where a wholly -owned subisidiary is merged into its parent, it is my understanding that such transaction is outside the scope of IFRS 3. Is the difference between the investment in sub and the merged assets and liablities recognised in equity in the parent´s separate FS?
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Marek Muc
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Re: BUCC - Subsidiary merged into parent

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Is there any goodwill recognised with respect to this subsidiary in consolidated financial statements?
marea
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Re: BUCC - Subsidiary merged into parent

Post by marea »

Yes, let´s assume it is. I presume that the goodwill will still remain in the consolidated FS, or am I wrong? I couldn´t find anything specific on this issue. I had a look at the DP issued by IASB, but such a case is not mentioned.

https://www.iasplus.com/en/news/2020/11/bcucc
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Marek Muc
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Re: BUCC - Subsidiary merged into parent

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Consolidated financial statements will obviously not be imapcted by this merger.

And you can recognise this goodwill in separate financial statements as well, I've seen this approach in practice.
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Re: BUCC - Subsidiary merged into parent

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Ps. Identical goodwill as in consolidated financial statements, and the remaining difference goes to equity
marea
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Re: BUCC - Subsidiary merged into parent

Post by marea »

This is interesting about recognising the goodwill in separate financial statements.

Thank you very much Marek.
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Marek Muc
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Re: BUCC - Subsidiary merged into parent

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Yes interesting but it makes sense if you think about it, this is just the same acounting as was done before merger. The merger itself is more like an internal reorganisation within the group.
marea
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Re: BUCC - Subsidiary merged into parent

Post by marea »

Yes, you are right. It is just that I have not heard about it nor seen it in practice yet.
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Marek Muc
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Re: BUCC - Subsidiary merged into parent

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marea
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Re: BUCC - Subsidiary merged into parent

Post by marea »

Thank you. This is helpful. I noticed that they presented it retrospectively.
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Marek Muc
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Re: BUCC - Subsidiary merged into parent

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No they did not, don't confuse primary financial statements with pro forma information in note 3
marea
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Re: BUCC - Subsidiary merged into parent

Post by marea »

Yes you are right, I was too quick with my reply ;) .
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