DISPOSAL OF SHARES IN SUBSIDIARY

There are consolidated issue when dispose shares in subsidiary.

• the resultant relationship between the investor and the investee
• the parent ceases to hold any shares in the investee
• remain parent but minority interest increases
• investee becomes associate
• investee become simple investment
• less monitoring and involvement
• goodwill on consolidation, amortised or not?
• may writen off against reserves or
• amortized through pnl or
• carried in the books as non-depreciable assets- to be eliminated when corresponding shares are disposed of
• determination of gain or loss on disposal of the shares in the investee
• difference between proceeds received(or receivables)  -  carrying value of the assets.
• for consolidated purposes: - proceeds are offset with the proportionate net assets of the subsidiary at the date of disposal.
• the net net impact on the disposal of shares in investor's books is that, the gain on disposal in Board/Company level is higher that Group Level. This is due to proceeds -  net assets on the disposal date and not based on date of acquiring

* resultant = occuring  or produced as a result