Financial Reporting Cap 2 - Disposal of a sub during the year

Limerick09

Hi All


Just a quick question hopefully someone can help!

If a parent disposes of a sub midway during the year do you time apporting the income statement for the period up to the date of disposal (i.e. sales, purchases etc? )??

It makes sense to me that you would but in the one question we did on it the solution has the entire years sales etc in it...

Any help would be greatly appreciated!

Justintime

Hi Limerick09,

Yes, if the subsidiary is disposed part way through the year then you do need to time apportion the income statement for the consolidated income statement.

I don't have the question or the solution that you refer to but it sounds as if there may have been a partial disposal. In other words, if we owned 80% of company S and we sold 25% of our holding then we'd end up with 60% of the company after the partial disposal. In this instance, you consolidate the full year results and the adjustment is to the minority interests - the MI are entitled to 20% of the PAT up to the disposal date and to 40% from the disposal date to the year end.

I hope this helps

Limerick09

thanks a mill yep it all makes sense now:)

wardso84

i was wondering could anyone explain what happens when an associate is disposed of?

Thanks very much.