- 5 Marks
CR – Dec 2022 – L3 – Q4b – Business combinations and consolidation
Explain how an investor can lose control over a subsidiary and the related accounting treatment in consolidated financial statements.
Question
The loss of control of a subsidiary that is a business, other than in a nonreciprocal transfer to owners, results in the recognition of a gain or loss on the sale of the interest sold and on the revaluation of any retained non-controlling investment. A loss of control is an economic event, similar to that of gaining control, and therefore is a re-measurement event.
Required:
Explain in what ways an investor may lose control over an investee, indicating how such an accounting event should be dealt with in the consolidated financial statements.
(Total: 5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Deconsolidation, Derecognition of Assets, IFRS 10, Loss of Control, Subsidiaries
- Level: Level 3
- Topic: Business combinations and consolidation
- Series: DEC 2022
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