The gain or loss on loss of control

Learning objectives

• Calculate the gain or loss associated with the loss of control from the consideration, the retained investment and the carrying amounts derecognised.L3, L4
• Analyse the portion of the gain attributable to remeasuring the retained investment.L4

Normative references

• IFRS 10 §B98On loss of control, the parent derecognises the subsidiary's assets (including goodwill) and liabilities at their carrying amounts, together with the carrying amount of any non-controlling interests, including any components of other comprehensive income attributable to them; it recognises the fair value of the consideration received, any distribution of shares of the subsidiary to owners in their capacity as owners, and any investment retained at its fair value at the date control is lost; it reclassifies to profit or loss, or transfers directly to retained earnings if required by other IFRS Standards, the amounts of other comprehensive income relating to the subsidiary (under B99); the resulting difference is a gain or loss in profit or loss attributable to the parent.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Orme SA loses control of Pin SA and receives {consideration} in cash. The fair value of the retained interest is {retained_fv}, the carrying amount of the non-controlling interests is {nci_carrying} and that of Pin's net assets derecognised, goodwill included, is {net_assets}. Case convention: no other accumulated other comprehensive income to reclassify. Calculate the gain or loss (a negative result is shown with a minus sign).L3
• The Orme group sells its majority stake in Hêtre SA for {consideration} in cash; the residual stake, without significant influence, has a fair value of {retained_fv}. In the consolidated balance sheet, Hêtre represents assets excluding goodwill of {subsidiary_assets}, goodwill of {goodwill}, liabilities of {subsidiary_liabilities} and non-controlling interests of {nci_carrying}. Case convention: no other accumulated other comprehensive income. Record the loss-of-control entry.L4
• For a loss of control, a colleague calculates: consideration received 700,000 − carrying amount of net assets derecognised 650,000 = gain of 50,000. The colleague ignores the fair value of the retained investment, 150,000, and the carrying amount of the non-controlling interests, 90,000. What is the error?L4