ACA Corporate Reporting Practice Questions - ICAEW ACA Advanced Level Corporate Reporting Exam

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A parent acquires 70% of a subsidiary. Two years later it acquires a further 10%, increasing its holding to 80% while retaining control. How is this further purchase accounted for under IFRS 10?

As a re-measurement of all net assets to fair value with a new goodwill calculation As a disposal of the original interest and re-acquisition of an 80% interest By recognising a gain or loss in profit or loss equal to the difference between consideration and NCI acquired As an equity transaction between owners, adjusting NCI and recognising any difference directly in equity (no gain, loss or new goodwill)

Correct Answer:

As an equity transaction between owners, adjusting NCI and recognising any difference directly in equity (no gain, loss or new goodwill)

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