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Chapter 20

CHAPTER 15 – CHANGES IN GROUP STRUCTURE

Example 15.1

(W1) Group Structure

P owns 60% NCI = 40%

Acquisition dates:

– 35% 31 Dec 20X1

– 25% 31 Dec 20X4

Stardust becomes a subsidiary of Ziggy from December 20X4. This is a step-
acquisition where control is achieved. Consolidation only occurs from 31
December 20X4 (4 years).

Ziggy must treat the step-acquisition as if they sold the original holding (35%)
and bought back the entire holding in one go (60%).

The 35% investment will need to be re-measured to fair value

Dr Investment (79,000 – 67,500) 11,500

Cr Profit (credit to group retained earnings) 11,500

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