ACCA FR Syllabus D. Preparation Of Financial Statements - Full Disposal - Notes ^{1 / 2}

This is when we lose control, so we go from owning a % above 50 to one below 50 (eg 80% to 30%).

In this case we have effectively disposed of the subsidiary (and possibly created a new associate).

As the sub has been disposed of - then any gain or loss goes to the INCOME STATEMENT (and hence retained earnings).

Also, the old Subs assets and liabilities no longer get added across, there will be no goodwill or NCI for it either.

How do you calculate this gain or loss?

What’s the effect on the Income Statement?

Consolidated until sale; Then treat as Associate (if we have significant influence) otherwise a FVTPL investment.

Show profit on disposal (see above).