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IFRS 10Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5
WorkpaperIFRS 10 — Consolidated Financial StatementsL3 · L4

Change in ownership without loss of control: equity transaction, adjustment of non-controlling interests and silences of the standard

3 missions9 sections to document60 min
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Status
Published

Objective of the workpaper

Describe the transaction with the third parties, list the carrying-amount base, the proportion acquired or sold and the fair value of the consideration, then compute the adjustment of the third parties and the difference attributed to the owners of the parent: no profit or loss and no additional goodwill. Where the standard is silent (goodwill, accumulated other comprehensive income, transaction costs), document the group’s policy without presenting it as imposed by the standard.

9 sections · 19 blocks · 5 calculations · 2 entries

  • IFRS 10 §23
  • IFRS 10 §B96
  • IFRS 10 §B94

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

3 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Change in ownership without loss of control: purchase from third parties and partial sale, difference in equity, silences of the standard on goodwill and other comprehensive income
Case tasks documented here
  • Do the two transactions cause a loss of control? How are they accounted for and what profit or loss do they give?
  • Sorvet: compute the carrying amount of the non-controlling interests acquired.
  • Sorvet: compute the difference to charge to the equity of the owners of the parent.
  • Delcour: compute the part of the carrying amount of net assets passed to third parties by the sale.
  • Delcour: compute the difference to credit to the equity of the owners of the parent.
  • Does the standard say how to split goodwill, accumulated other comprehensive income and transaction costs? Which policy does the group adopt?
  • Record the purchase from third parties.
  • Record the partial sale without loss of control.
1

Facts and data

Inputs

  • Transaction: parties, date, percentages before and after, confirmation that control is retained

    TextRequired

    PURCHASE_OF_FIFTEEN_POINTS_FROM_THIRD_PARTIES_CONTROL_RETAINED

  • Carrying-amount base: non-controlling interests (purchase) or net assets of the subsidiary (sale)

    Number

    600,000

  • Proportion acquired or sold (%)

    Number

    50 %

  • Fair value of the consideration paid (purchase) or received (sale)

    Number

    380,000

  • Group policy for goodwill, accumulated other comprehensive income and transaction costs

    Text

    GOODWILL_AND_OCI_SPLIT_PRO_RATA_TO_THE_INTEREST_CHANGED_NO_COSTS

2

Supporting documents

Evidence

  • Documents obtained and referenced (purchase or sale agreement, valuation of the consideration, equity of the subsidiary)

    EvidenceRequired

3

Analysis of the change without loss of control

Analysis

IFRS 10 §23IFRS 10 §B96IFRS 10 §B94

  • Points reviewed: change without loss of control

    ChecklistRequired

    • Control retained after the transaction: otherwise, see loss of control
    • Transaction with owners in their capacity as owners, accounted for within equity
    • Carrying amounts of the owners of the parent and of third parties adjusted to reflect the new interests
    • Difference between the adjustment of third parties and the consideration recognised in equity; no profit or loss, no additional goodwill
    • Silences of the standard: split of goodwill and other comprehensive income, transaction costs; policy documented
    • Later profit attributed on the new percentages
4

Calculations

Calculations

IFRS 10 §B96

  • Carrying amount transferred between owners and third parties (base × proportion)

    Calculation

    300,000

    Carrying-amount base: non-controlling interests (purchase) or net assets of the subsidiary (sale) ; Proportion acquired or sold (%)

  • Purchase: difference charged against owners’ equity (consideration paid − adjustment of third parties)

    Calculation

    80,000

    Fair value of the consideration paid (purchase) or received (sale) ; − Carrying amount transferred between owners and third parties (base × proportion)

  • Purchase: difference credited to owners’ equity (consideration lower than the adjustment)

    Calculation

    0

    Fair value of the consideration paid (purchase) or received (sale) ; − Carrying amount transferred between owners and third parties (base × proportion)

  • Sale: difference credited to owners’ equity (consideration received − adjustment of third parties)

    Calculation

    80,000

    Fair value of the consideration paid (purchase) or received (sale) ; − Carrying amount transferred between owners and third parties (base × proportion)

  • Sale: difference charged against owners’ equity (consideration lower than the adjustment)

    Calculation

    0

    Fair value of the consideration paid (purchase) or received (sale) ; − Carrying amount transferred between owners and third parties (base × proportion)

5

Illustrative entries

Entries

  • Entry: purchase from third parties without loss of control

    Entry

    AccountDebitCredit
    Non-controlling interests (carrying amount acquired)300,000
    Equity attributable to owners of the parent (difference, decrease)80,000
    Cash paid380,000

  • Entry: partial sale without loss of control

    Entry

    AccountDebitCredit
    Cash received380,000
    Non-controlling interests (carrying amount passed to third parties)300,000
    Equity attributable to owners of the parent (difference, increase)80,000
6

Judgment: group policy where the standard is silent

Judgment

IFRS 10 §B96

  • Policy for splitting goodwill and accumulated other comprehensive income

    JudgmentRequired

    Split in proportion to the interest changed (group policy)

    Split in proportion to the interest changed (group policy) / No reallocation between owners and third parties (group policy) / No goodwill or other comprehensive income concerned

    Professional judgment: the standard does not say how to split goodwill and accumulated other comprehensive income nor where to charge transaction costs; the choice is a group policy, never a rule.

  • Rationale: method retained, consistency from one transaction to the next, not imposed by the standard

    Text

    GROUP_POLICY_NOT_IMPOSED_BY_THE_STANDARD

7

Effect on the financial statements

FS impact

  • Effect derived from the entries

    Table

8

Conclusion

Conclusion

  • Difference in equity attributed to the owners of the parent, adjustment of third parties and policy retained, with no profit or loss and no additional goodwill

    ConclusionRequired

9

Normative references

References

  • Normative references cited in this workpaper

    References

10

Checks and financial statement impact

  • Transaction describedPass
  • Group policy judged and documentedPass
  • Purchase entry balancedPass
  • Sale entry balancedPass
Assets
0
Liabilities
0
Profit or loss
0
OCI
0
Equity
0