Accountancy Forum
Consolidated Financial Statements - Printable Version

+- Accountancy Forum (
+-- Forum: The Profession (/forumdisplay.php?fid=4)
+--- Forum: Accounting and Audit (/forumdisplay.php?fid=7)
+--- Thread: Consolidated Financial Statements (/showthread.php?tid=5436)

Pages: 1 2

- jihad - 12-12-2009 05:50 AM

Mr mohamad Amir it was very very nice and usful information , specialy that part belongs to the second purchase of the equity . Beleave me even i passed the CMA from 2 years ago i didnt know about tais part of aquisition . hence i want to add something to Mr wsafca tilling him that this positive good will after 31 march 2004 should be tested anualy , so its not allowed to amortizing the good will.

- Muhammad Amir - 12-12-2009 06:13 PM

IFRS-3 has been ammended in 2008 to help allign IASB with US GAAP. So, there are some major changes in it.

- jihad - 12-13-2009 04:07 AM

alsalam 3likom ,

Mr Mohammad , i reversed to the IFRS3 and i found somthing in this reporting standard which telling me that A business combination may involve more than one exchange transaction, for example when it occurs in stages by successive share purchases. If so, <font color="red">each exchange transaction shall be treated separately by the acquirer, using the cost of the transaction and fair value information at the date of each exchange transaction, to determine the amount of any goodwill </font id="red"> <font color="red">associated with that transaction</font id="red">. This results in a step-by-step comparison of the cost of the individual investments with the acquirer’s interest in the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities at each step.
So if you can help me by telling me from wher did you bring that information ill be appreciate.

- Muhammad Amir - 12-13-2009 06:27 AM


Important question is whether the further transaction results in a control being lost. If we already hold a subsidiary and later we disposed some shares in that subsidiary, which does not result in a control being lost then this transaction should be treated as treasury transaction.

It is imortant to understand that goodwill shall only be determined once the control is achieved, later if you further acquire or dispose off some shares in that subsidiary which does not affect your controlling status then there is no need to re-compute the goodwill. Such transactions shall be dealt as treasury transactions (i.e. transaction which will be setteled and accounted for in the equity).

Read Paragraph 30 and 31 of IAS-27 in this regard.

30. Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners)

31. In such circumstances the carrying amounts of the controlling and non-controlling interests shall be adjusted to reflect the changes in their relative interests in the subsidiary.<b> Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received shall be recognised <font color="maroon">directly in equity</font id="maroon"> and attributed to the owners of the parent.</b>

Please also read BC-58 of Basis for Conclusion on IAS-27 under sub-heading Multiple Arrangements.

I am also posting here a link of Deloitte's guidance on revised IFRS-3 and IAS-27 - Business Combination and Changes in Ownership Interests. It is very useful guide to equip you with the required knowledge of consolidation.


It's chapter 12 is all about step acquisitions and partial disposals.

<b>Page 100</b> of the above mentioned guidance provides, <b>"there is no consequential adjustment to the carrying amount of goodwill, and no gain or loss is recognised in profit or loss."</b>

It further states, <b>"For a transaction between the parent and non-controlling interests, IAS 27(2008) does not give detailed guidance as to how to measure the amount to be allocated to the parent and noncontrolling interest to reflect a change in their relative interests in the subsidiary. More than one approach may be possible. In most cases, however, the best approach may be to recognise any difference between the fair value of the consideration paid and the non-controlling interest, in terms of existing carrying amount, directly in equity attributable to the parent."</b>

I hope It helps!


Muhammad Amir

- jihad - 12-14-2009 12:04 AM

Thank you Mohamad ,

With all regards .

- ali_boy9 - 01-05-2010 08:14 AM

very informative discussion.