Page 293 - SBR Integrated Workbook STUDENT S18-J19

Change in a group structure

Example 2

Disposal

Bounce, which has a year end of 31 December 20X6, purchased 70% of the
ordinary shares of Trampet in 20X2. On 31 July 20X6, it sold a 60% holding of
the shares (reducing its holding to 10%) for $90 million. The investment was
held at its cost of $35 million in Bounce’s individual financial statements.

Bounce measures non-controlling interests at acquisition at fair value. At the
acquisition date, the identifiable net assets of Trampet and the non-controlling
interest had fair values of $40 million and $13 million respectively. In the year
ended 31 December 20X5 the goodwill arising on the acquisition of Trampet
was impaired by $3 million.

The net assets of Trampet at the disposal date were carried at $95 million.
The fair value of the remaining 10% shareholding at this date was $12 million.

Calculate the profit or loss on disposal that will be recorded in:

 the individual financial statements of Bounce

 the consolidated financial statements of the Bounce group.

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