How To Control The Loss Of Share Rights?

The notice on the implementation of accounting standards for listed companies and non listed enterprises to do the work of the annual report 2009 (No. 2009] 16) has clearly stipulated the accounting treatment of the disposition of the differences: the enterprises have disposed of the subsidiary companies.

The difference between the disposal price and the book value corresponding to the disposal of investment should be recognized as the current investment income in the parent company's financial statements. The difference between the disposal of the price and the disposal of investment corresponds to the net asset share of the subsidiary company, which should be recognized as the investment income in the current period in the consolidated financial statements.

Accounting 2010 [15], if the enterprise has lost control of the original subsidiary company for disposing part of the equity investment or other reasons, it should distinguish the individual financial statements and consolidated financial statements for relevant accounting treatment. In the individual financial statements, the disposal of the shares shall be handled according to the provisions of the accounting standards for Enterprises No. second - long term equity investment.

At the same time, the remaining shares should be recognized as long-term equity investments or other related assets based on their book value.

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In consolidated financial statements, residual equity should be remeasured in accordance with the fair value of loss of control day.

The difference between the consideration of the equity disposal and the fair value of the remaining shares, minus the difference between the original assets and the net assets that the original subsidiary will continue to calculate from the date of purchase, should be deducted from the original shareholding ratio.

Other comprehensive income related to the equity investment of the original subsidiary company should be turned into the current investment income when the control right is lost.

The accounting rules for enterprise accounting standards 2010 explained the accounting treatment methods of accounting No. 2009 and 16 [accounting 2010] 15 in the handling of the loss of control, and explained them in the form of cases. However, accounting treatment of consolidated financial statements was analyzed and calculated, and no specific accounting entry was made.

Accounting 2012 [19] stipulates that an enterprise shall deal with each paction in accordance with the provisions of accounting No. 2009 [16] and financial accounting [2010] 15 according to the provisions of financial pactions [16] and accounting [2010] 15.

However, the handling of a package paction is specially explained, that is, dealing with all pactions involving equity investment and loss of control of a subsidiary company belongs to a package paction. The paction should be handled as a paction dealing with subsidiaries and losing control rights.

Under one or more circumstances, a package deal can be used for accounting treatment: that is, those pactions were made at the same time or under the influence of each other; these pactions can achieve a complete business result as a whole; the occurrence of a paction depends on the occurrence of at least one other paction; a paction alone is not economic, but it is economic when considering other pactions.

First, the surplus stock is remeasured and adjusted according to the fair value of the loss control day; secondly, the period of attribution of the partial disposal income in the individual financial statements is adjusted; finally, from the capital surplus, the other comprehensive income which is corresponding to the residual equity should be pferred to the investment income.

The disposal income of the consolidated financial statements in the current period is equal to (the fair value of the disposal of equity and the remaining equity) - the net assets held by the original subsidiary from the date of purchase, the original shareholding ratio) - goodwill + other comprehensive income * the original shareholding ratio should be noted that the goodwill of the disposal of the subsidiary should be all carried forward.

In case of loss of control, the first is no longer recognised goodwill, minority shareholders' rights and interests, assets and liabilities are no longer included in the consolidated balance sheet.

Two, the disposal gains and losses in consolidated financial statements do not need to be pferred to capital reserves.

Three, it is necessary to carry out retrospective adjustment in individual financial statements and adjust the cost method to the equity law.

For cases where no control is lost, the first is that the consolidated financial statements should be compiled as usual.

Goodwill remains unchanged and minority shareholders' rights and interests are changed.

Two, the consolidated financial statements need to turn the disposal gains and losses into capital reserves, and the disposal of profits and losses is zero.

Three, there is no retrospective adjustment in individual financial statements, and only the disposal of profits and losses is recognized.

Case: in January 1, 2010, a company paid 120 million yuan in bank deposits and obtained a 100% stake in the company B. In January 1, 2010, the fair value of the identifiable net assets of the company B was 100 million yuan, and its goodwill was 20 million yuan.

From January 1, 2010 to December 31, 2011, the net assets of the company B increased by 15 million yuan, of which the net profit from the fair value of the purchase date was 10 million yuan, and the fair value of the financial assets held for sale was appreciated by 5 million yuan.

In January 8, 2012, a company pferred 60% of the shares of the company B, and obtained the disposal price of 96 million yuan. The proportion of a company's shareholding to the company B was reduced to 40%, which could have a significant impact on the company B, but lost control. The fair value of the remaining equity 40% was 64 million yuan. Assuming that the company extracts surplus surplus by 10%, the cash dividend is not distributed, and other factors are not considered.

Analysis: accounting for individual reports

1. recognised partial disposal proceeds

Borrow: bank deposit 9600

Loans: long-term equity investment 7200 (12000 x 60%)

Investment income 2400

2. accounting for the remaining 40% shares by equity method

Borrowing: long-term equity investment 600

Loans: surplus reserves 40 (1000 x 40% * 10%)

Profit allocation 360 (1000 x 40% * 90%)

Capital reserves 200 (500 x 40%)

Entries in consolidated statements:

1. revaluation of residual equity based on the fair value of loss control day.

Borrowing: long-term equity investment 6400

Loans: long-term equity investment 5400[(12000+1500) * 40%)]

Investment income 1000

2. adjust the period of attribution of partial disposal income in individual financial statements.

Borrowing: investment income 600 (1000 x 60%)

Loan: undistributed profit 600

Note: in the consolidated statement, the equity method should be adjusted to 60% of the disposal portion first.

Borrow: long-term equity investment 600 (1000 x 60%)

Loan: undistributed profit 600 (1000 x 60%)

When disposing of the 60% equity interest, the consolidated statement is adjusted to increase the book value of long-term equity investment after the adjustment of the equity method. In fact, a portion of the investment proceeds is actually recognized in the individual accounts for disposing part of the 60% equity interest, so the consolidated income statement needs to reduce the investment income.

Borrowing: investment income 600 (1000 x 60%)

Loans: long-term equity investment 600 (1000 x 60%)

After adjusting the above two entries, we should borrow "investment income" and "undistributed profit".

3. from the capital surplus to 2 million yuan of other comprehensive income which is originally included in the rights and interests corresponding to the residual equity, the investment should be re classified into investment income.

Loan: capital reserve - other capital reserves 200 (500 * 40%).

Loan: investment income 200

Note:

The 40% equity interest is also disposed of, so it is necessary to reclassify other comprehensive income into investment income.

That is, the consolidated statements only adjust the other comprehensive income corresponding to the remaining shares, and there is no need to adjust the capital reserve for disposing part of the 60% equity interest.

Loss of control, disposal, merger and disposal of profit and loss in the consolidated statements of subsidiaries (= fair value of partial shares sold and fair value of remaining shares) - the fair value of the identifiable net assets since the date of purchase, and the original shareholding ratio - goodwill + other comprehensive income * original shareholding ratio = (9600+6400) - (10000+1500) x 100%-2000+500 x 100%=3000 (10000 yuan).

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