Beruflich Dokumente
Kultur Dokumente
CHANGES IN OWNERSHIP
Change in Ownership interest Accounting Treatment
Subsequent increase or decrease in Equity transaction; no gain or loss is
ownership interest but parent retains recognized; goodwill is not adjusted
control
Fair value of consideration less Change in
NCI equal direct adjustment in equity
owners of the parent (i.e., RE – Parent)
Cash xx
Investment xx
Goodwill xx
Net identifiable assets xx
Gain on disposal xx
Sample Problem
On January 1, 2013, P, Co. acquired 80% interest
in S, Inc. by issuing 5,000 shares with fair value of
P15 per share and part value of P10 per share. S’s
identifiable assets have a fair value of P90,000.
Goodwill has been computed under each of the
available options under PFRS 3 (fair value and
proportionate share).
NCI 20,000
Share Premium– P 10,000
Investment in subsidiary 30,000
NCI 20,750
Share Premium– P 9,250
Investment in subsidiary 30,000
NCI 12,000
Share Premium – P 8,000
Investment in subsidiary 20,000
NCI 12,450
Share Premium– P 7,550
Investment in subsidiary 20,000
Cash 20,000
Investment in subsidiary 9,375*
Gain on sale 10,625
* (75,000 x 10/80)
NCI at Proportionate share
of FV of subsidiary’s net
identifiable assets
% Owners of % NCI Net
Parent assets of
S, Co.
Before the
transaction 80% 80,000 20% 20,000 100,000
After the
transaction 70% 70,000 30% 30,000 100,000
Change –
Inc.(Dec.) (10,000) 10,000 -
Consolidation Working Paper
Entries
Jan. 1, 2014
Cash 25,000
Share Capital 10,000
Share Premium 15,000
NCI at Proportionate share of FV
of subsidiary’s net identifiable
assets
% Owners % NCI Net
of Parent assets
of S,
Co.
Before the
transaction 80% 80,000 20% 20,000 100,000
After the
transaction 66.67 83,333 33.33% 41,667 125,000
%
Change –
Inc.(Dec.) 3,333 21,667 25,000
Consolidation Working Paper
Entries
Jan. 1, 2014