Changes in ownership of a subsidiary after control is obtained
08 Mar 2008
One of the more controversial issues in the IASB's recently completed amendments to IAS 27 Consolidated and Separate Financial Statements was how to account for changes in ownership of a subsidiary after control is obtained.
During its deliberations, the IASB considered six methods that were being used in practice and reached the following decisions:
- Partial disposal of an investment in a subsidiary while control is retained. This is accounted for as an equity transaction with owners, and gain or loss is not recognised.
- Acquiring additional shares in the subsidiary after control was obtained. This is accounted for as an equity transaction with owners (like acquisition of 'treasury shares'). Goodwill is not remeasured