Understand how a parent company may lose control over its subsidiary and the necessary accounting steps to take when this occurs. Learn how to treat components of OCI and reclassify amounts in equity to profit or loss. Explore an illustrative example of how to account for the full disposal of a subsidiary.
Mastering the art of consolidated financial statements
- Non-controlling interest (NCI) in a subsidiary is any equity interest not held by the parent. NCI is presented within equity, separate from the parent's equity, in consolidated financial statements. Measurement of NCI depends on the instrument's classification as equity or liability.
- How business combinations are accounted for when a parent already has an interest in an investee before it becomes a subsidiary. It also describes how goodwill is calculated and provides an illustrative example of how adjustments are made during the measurement period.
- How to account for business combinations between unrelated parties using the acquisition method under IFRS 3 / ASC 805. Also how to determine whether a subsidiary constitutes a business and what items to include in the consolidated financial statements.
- Understand the impact of changes in ownership interest on a subsidiary without loss of control. Read about reattribution of OCI, reallocation of goodwill, non-cash acquisition of NCI, and transaction costs. Get an insight on how these changes are reflected in financial reporting and subsidiary management.
- Learn about the preparation of a consolidated statement of cash flows in accordance with IFRS or US GAAP. The statement should reflect only the cash movements of the group and eliminate any intragroup transactions. Transactions with unconsolidated subsidiaries, non-controlling interests, associates, and joint ventures are not eliminated.