Loss of control of a subsidiary: derecognition, fair value of the retained interest, gain or loss, other comprehensive income reclassified, multiple arrangements and the retained interest: Fonds Cyrene — sale of 88%

Context

Haltrey Group SA (fictitious entity) lost control of two entities in 20X6: Sorvane Industrie SA, sold under two linked contracts with a retained 30 % interest that became an associate, and Fonds Cyrene, managed by its subsidiary, whose control is reassessed after the sale of 88 % of the units. You prepare the accounting file for these two losses of control.

Assignment

Losses of control of Sorvane (gain, associate) and of Fonds Cyrene (loss, financial asset)

Purpose of the workpaper

List the assets (goodwill included), liabilities and non-controlling interests derecognised, the consideration received and the fair value of the retained interest, then compute the gain or loss, the reclassification of other comprehensive income and the part of the gain relating to the remeasurement of the retained interest. Fair values are case data; the assessment of multiple arrangements remains a judgment.

Questions of the file covered by this workpaper

• Sorvane: do the two sale contracts form a single transaction? On which date is control lost?
• Sorvane: compute the carrying amount of the net assets derecognised (goodwill included).
• Sorvane: compute the gain on loss of control before reclassification of other comprehensive income.
• Sorvane: identify the part of the gain relating to the remeasurement of the retained interest to fair value.
• Sorvane: compute the amount of other comprehensive income reclassified to profit or loss and state what happens to the non-reclassifiable reserve.
• Sorvane: how is the retained 30 % interest treated after the loss of control? Which value serves as the cost for the equity method?
• Fonds Cyrene: after the sale and the arrival of Caisse Norde, is Haltrey Gestion still a principal? What is the effect on control and on which date?
• Fonds Cyrene: compute the carrying amount of the net assets derecognised.
• Fonds Cyrene: compute the gain or loss on the loss of control.
• Fonds Cyrene: how is the retained 12 % interest treated? Which value to give it and under which standard afterwards?
• Record the derecognition of Sorvane with a gain and the retained interest at fair value.
• Record the reclassification to profit or loss of Sorvane’s other comprehensive income.
• Record the derecognition of Fonds Cyrene with a loss and the retained interest at fair value.

• MemoGroup profile and case conventionsOpen
• ContractSorvane Industrie SA: sale under two linked contractsOpen
• ContractFonds Cyrene: sale of units and reassessment of controlOpen
• MemoManagement performance bonusOpen