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CHANGES IN DEGREE OF CONTROL
Preferred approach
• The first approach for preparing the pro forma consolidation journals
would be to assume that on the date that control was lost, the parent
and subsidiary's financials were not combined (no consolidation took
place).
• The pro forma consolidation journals would therefore commence by
journalising the parent's share of the post-acquisition reserves of the
subsidiary followed by 100% of the current year's profit or loss and
other comprehensive income whilst it was a subsidiary and recognising
NCI's share therein.
• It is important to note that the parent's and NCI's share in the subsidiary
will only be disclosed in the consolidated statement of profit or loss and
other comprehensive income and statement of changes in equity.
• The next step would be to eliminate the parent's gain or loss on disposal
of the shares recognised in its separate records followed by recognising
the consolidated gain or loss with the loss of control.
• The last step is the reclassification to profit or loss, or transfer directly to
retained earnings if required by other IFRSs, all amounts recognised in
other compre-hensive income in relation to that subsidiary on the same
basis as would be required if the parent disposed of the related assets
or liabilities.
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