Deconsolidation for group of companies

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david1
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Joined: 29 Jun 2022, 05:05

Deconsolidation for group of companies

Post by david1 »

In this group of companies there are 5 companies involved, 1 holding company and 4 subsidiaries. One of the subsidiaries is going through voluntary dissolution in the middle of the financial year, derecognising of the assets, liabilities and NCI of the subsidiary will take place in the month of dissolution (way before year end). Here's my question, for the group P&L, would the transactions occurred by the dissolved subsidiary during the FY still be appearing in the last month YTD group consolidation?
HVR
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Joined: 06 Dec 2021, 13:43

Re: Deconsolidation for group of companies

Post by HVR »

As you are talking about YTD figures, I assume you are talking about management reporting? They need to be included in the financial statements, but I think you have an option to choose for your internal reporting. It also depends on the impact of the figures of the dissolved entity.
If you eliminate the figures of the dissolved entity in this year (and maybe also in last years if you use them as comparable figures in reporting), you will provide a better picture of the results of the continued activities. On the other hand, your YTD figures will not align with the figures in the financial statements at year end unless you included the result of the dissolved entity in a separate line.
david1
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Joined: 29 Jun 2022, 05:05

Re: Deconsolidation for group of companies

Post by david1 »

Thanks for your reply, but what about the standards according to financial reporting - is the income statement of the dissolved subsidiary to be aggregated to the consolidated income statement for the FY? Since the subsidiary will be dissolved in current FY, technically it will not show up in the consolidated balance sheet on the last day of the FY but there will definitely be an impact to the YTD consolidated income statement if there happen to be such a requirement by the standard for the subsidiary to be consolidated in spite of being dissolved during the FY.
Leo
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Joined: 05 Apr 2020, 22:31

Re: Deconsolidation for group of companies

Post by Leo »

You'll have it in the consolidated P&L, but nothing in the balance sheet at the year end's consolidated financial statements.

Because, whatever conso or not, balance sheet is a picture of the group at point in time and P&L records performances over time.
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Marek Muc
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Re: Deconsolidation for group of companies

Post by Marek Muc »

If the subsidiary was part of the group during year, you have to include it in consolidated P&L up to the date of deconsolidation.

Ps. Specific presentation rules apply if this subsidiary satisfies definition of a discounted operation:

https://ifrscommunity.com/knowledge-bas ... perations/
david1
Posts: 5
Joined: 29 Jun 2022, 05:05

Re: Deconsolidation for group of companies

Post by david1 »

Leo wrote: 29 Jun 2022, 17:46 You'll have it in the consolidated P&L, but nothing in the balance sheet at the year end's consolidated financial statements.

Because, whatever conso or not, balance sheet is a picture of the group at point in time and P&L records performances over time.
Thanks Leo!
david1
Posts: 5
Joined: 29 Jun 2022, 05:05

Re: Deconsolidation for group of companies

Post by david1 »

Marek Muc wrote: 29 Jun 2022, 22:05 If the subsidiary was part of the group during year, you have to include it in consolidated P&L up to the date of deconsolidation.

Ps. Specific presentation rules apply if this subsidiary satisfies definition of a discounted operation:

https://ifrscommunity.com/knowledge-bas ... perations/
Thanks and appreciate the additional link.
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