Parent Corporation owns 75% of Subsidiary Corporations voting rights and loses control of Subsdiarys by selling the 40% of Subsidiarys shares for P400,000. The book value of the remaining Investment after the sale is P300,000 while its fair value at the date of loss of control is P335,000. At the time of the sale, the carrying amount of the Non-controlling interest is P220,000 and the book value of the Subsidiarys net assets is P870,000. How shall the parent account for the loss of control? a. The parent shall derecognize in its consolidated financial statements the assets, liabilities and goodwill of the subsidiary, NCI, at their carrying amount on the date when control is lost. b. The parent shall also recognize gain/(loss) on deconsolidation of P85,000 in profit or loss by comparing the aggregate of (1) Proceeds of sale P400,000; (2) Fair value of Retained Investment P335,000; and (3) Carrying amount of NCI at the time of sale P220,000 with the carrying amount of Subsidiarys net assets at the time of sale of P870,000. c. The parent shall remeasure the retained investment from P300,000 to its fair value of P335,000 on the date when the control is lost with the gain of P35,000 to be presented in profit/loss, and the retained investment shall be accounted for at either Investment in Associate under PAS 28 or Fair Value Investment under PFRS 9. d. All of the answers are correct.
Parent Corporation owns 75% of Subsidiary Corporations voting rights and loses control of
Subsdiarys by selling the 40% of Subsidiarys shares for P400,000. The book value of the remaining
Investment after the sale is P300,000 while its fair value at the date of loss of control is P335,000. At
the time of the sale, the carrying amount of the Non-controlling interest is P220,000 and the book value
of the Subsidiarys net assets is P870,000. How shall the parent account for the loss of control?
a. The parent shall derecognize in its consolidated financial statements the assets, liabilities and
goodwill of the subsidiary, NCI, at their carrying amount on the date when control is lost.
b. The parent shall also recognize gain/(loss) on deconsolidation of P85,000 in profit or loss by
comparing the aggregate of (1) Proceeds of sale P400,000; (2) Fair value of Retained Investment
P335,000; and (3) Carrying amount of NCI at the time of sale P220,000 with the carrying amount of
Subsidiarys net assets at the time of sale of P870,000.
c. The parent shall remeasure the retained investment from P300,000 to its fair value of P335,000 on
the date when the control is lost with the gain of P35,000 to be presented in profit/loss, and the retained
investment shall be accounted for at either Investment in Associate under PAS 28 or Fair Value
Investment under PFRS 9.
d. All of the answers are correct.
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