Page 289 - SBR Integrated Workbook STUDENT S18-J19
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Change in a group structure
Example 1
Step acquisition
Price is a public limited company with a number of subsidiaries.
On 30 June 20X5, Price bought 10% of the ordinary shares of Sandbox for $1
million and, in accordance with IFRS 9 Financial Instruments, classified the
investment to be measured at fair value through other comprehensive income.
These shares were correctly revalued to their fair value of $1.6 million on 31
December 20X5.
On 31 March 20X6, Price bought an additional 70% of the ordinary shares of
Sandbox for $15 million. The fair value of the original 10% holding on this date
was $2 million.
The carrying amount of Sandbox’s identifiable net assets at 31 March 20X6
was $18 million. This excludes a contingent liability relating to a legal case
which has a fair value of $3 million and could lead to an eventual payment of
$12 million.
Price wishes to measure the non-controlling interest at acquisition using the
proportion of net assets method.
Discuss how the above should be dealt with in the consolidated financial
statements of the Price group for the year ended 31 December 20X6.
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