accounting entries for closing a subsidiary

i have a scenario, The group disposed ALL subsidiaries on 24 december, and at reporting date 31 december for interim report (financial year end is 30 June), we only have a single company, how do i recognise the groups gain on disposal when there is no group existing on 31 december ? Copyright 2010-2023 Wave Financial Inc. All Rights Reserved. But, your explanation enhanced conceptual clarity. What is the key driver behind this type of transaction? or expense account. In our case, we will apply the "predecessor accounting method" . Due to NAH is SR200,000 Dear Silvia, I have a question. Journal Entries is also one of the most asked topics in many accountancy examinations. Thanks! Hi Malik, The bankruptcy trustee now manages the subsidiary, and we have no control over assets or liabilities of the subsidiary. Or what shares did Company Y sold? He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984. $200K) in the Parent. Contact a tax professional for assistance.. What entries will be recorded, Any gain will go to P&L? I am not sure what you mean by if the intra-group debt is with the holding company. Pass-through subsidiary activity will flow to the parent for tax purposes. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo Thanks in advance. Or Do I still prepare them as consolidated financial statements for 2019 and 2020 and from 2021 standalone only ? Did you know you can get expert answers for this article? How to prepare it? And the values aren't exactly as small, I've just used those amounts. suppose control is now in the hands of the liquidator. I hope it helps. If wikiHow has helped you, please consider a small contribution to support us in helping more readers like you. = Consolidated gain / loss. Since, by definition, parents own more than 50% of the subsidiarys stock, the parent usually exercises majority control. An event occurring entirely within an entity. you can learn the basic steps and methodology of consolidation with a nice video, various scenarios of how the group can change, IFRS 10 Consolidated Financial Statements for guidance, consolidating special purpose entity here, I cover similar topic of deemed disposal of an associate here, going concern does not apply and you should read this article, IFRS 5 as the liquidating subsidiary is a discountinued operation, http://archive.ifrs.org/Use-around-the-world/Education/Documents/Framework-based%20teaching%20materials/Acquisitive-case-study-2015-final.pdf, Example: Consolidation with Foreign Currencies, How to Account for Government Grants (IAS 20). Credit Babys net assets: 116 700 (to derecognize them fully; of course, you need to go item by item Debit Babys liabilities, Credit Babys PPE you get the point I hope) (Journal entry number) provides a full audit trail as it retrieves the number of the manual or automatic journal entry. So first, lets calculate goodwill at acquisition (which happens to be the same as the goodwill on disposal, since no impairment has been charged so far): Now, we can calculate Groups gain in the consolidated financial statements: Once you have all these calculations, then you should prepare the consolidated statement of profit or loss in three steps: Our consolidated statement of profit or loss is here: Notes: Numbers in Combine column were calculated as sum of Mommy Corp column and Baby Ltd column. What will be the accounting entry in this regards. Hi Silvia, for the calculate group gain in the consolidated FS, I can find the same answer based on the difference between the disposal proceed and the groups share of the post-acquisition profits (losses) of the subsidiary up to the date of disposal (180,000 100,000 19,760). We use cookies to personalize content and to provide you with an improved user experience. However, lets keep it simple here and focus on the full sale of shares with loss of control. Question 1 In separate financial statement for recognising profit Cost of the shares sold should be calculated using average cost of holding or Taking FIFO method. Job done. that way equity becomes nil and balance sheet is nil? Accounting for Transactions with the Subsidiary, {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/a\/a3\/Account-for-Subsidiaries-Step-1-Version-2.jpg\/v4-460px-Account-for-Subsidiaries-Step-1-Version-2.jpg","bigUrl":"\/images\/thumb\/a\/a3\/Account-for-Subsidiaries-Step-1-Version-2.jpg\/aid1506268-v4-728px-Account-for-Subsidiaries-Step-1-Version-2.jpg","smallWidth":460,"smallHeight":345,"bigWidth":728,"bigHeight":546,"licensing":"