Group Restructuring - Common control

[WBconsult89]

Hi All.

We are busy with a restructuring within the group and need some assistance.

Holdco owns 100% of Company A and Company A owns 100% of Company B.

Management wants to change the shareholding, where Holdco will directly own 100% of Company A and 100% of Company B.

Questions:
Is this restructuring, where Company A is no longer an intermediate company, a common control transaction?
What will happen with the investment in subsidiary of Company A in Company B? It is currently accounted for at cost.
Do we need any additional disclosures on a group level?

Much appreciated.

[Marek Muc]

It is a common control transaction but not a business combination under common control because no party gains control over a business that it didn't already control.

Regarding A's separate financial statements, see https://ifrscommunity.com/knowledge-bas ... tatements/

[WBconsult89]

Thanks. I do have the following journals in Holdco's separate records:

Dr Investment in subsidiary XX
Cr Contribution (Equity) XXXXX
To recognise the aquisition of Company B

Company A:
Dr Distribution (Equity) XXXX
Cr Investment in subsidiary XXXX

Will the distribution reserve be disclosed separately in the separate financial statements or will it form part of retained earnings?

[Leo]

If it's the distribution approach you've chosen, then, in Hodco, it should go to P&L, and impairment considerations in Hodco around it's investment in Company A.

[WBconsult89]

Thanks! I realised it when I posted it that Holco should go for P&L which I agree with.

[WBconsult89]

It is an upstream transfer and effectively, Holdco will need to recognise the dividend through P&L.

[Marek Muc]

If Subsidiary A doesn’t have enough accumulated profits, this should be recognised as a decrease in the investment in A.