Page 301 - SBR Integrated Workbook STUDENT S18-J19

Change in a group structure

3.2 Share sales

Some share sales simply reduce the parent’s holding in a subsidiary but do not lead
to a loss of control.

80% of 75% of
shares shares

In such instances there is no change in control status. This means that:

 Goodwill is not recalculated

 A profit or loss does not arise on the transaction.

Instead the transaction is accounted for in equity, as an increase in the non-
controlling interest. The entry in the consolidated financial statements is:

Dr Cash X

Cr Non-controlling interest X

Dr/Cr Other components of equity X (bal. fig.)

The increase in the NCI will be the share of the net assets (always) and goodwill (fair
value method only) of the subsidiary at the date of disposal which the parent has
effectively sold to the NCI.

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