What is Change in ownership without loss of control?
In short
When a parent buys more shares of a subsidiary or sells some shares but keeps control, the change is an equity transaction. No gain or loss is recognized; the noncontrolling interest's carrying amount is adjusted, with the difference in additional paid-in capital.
Key takeaways
- Goodwill and the subsidiary's net assets aren't remeasured.
- When the parent loses control, it deconsolidates, recognizes a gain or loss, and remeasures any retained interest at fair value.
- Acquiring control in stages is a step acquisition.
Where it's tested
BAR: Business Combinations (Advanced) — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A parent sells part of its interest in a subsidiary and loses control, keeping a 30% interest that gives it significant influence. How is the retained 30% interest measured?