This free, guided checker walks your finance team through the key decision points for IFRS 10 Changes in Ownership Without Loss of Control. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Ownership changes include share purchases from NCI, sales of partial stakes to NCI or third parties, and subsidiary share issuances that dilute or increase the parent's percentage. Indirect changes count too: a subsidiary buyback of NCI shares or equity-settled awards issued by the subsidiary can shift relative interests without the parent transacting directly. Sweep the group share registers and subsidiary equity rollforwards for the period rather than relying only on treasury records.
No change in the parent's ownership interest occurred, so the equity-transaction requirements of IFRS 10.23 and IFRS 10.B96 do not apply this period.
Official guidance: IFRS issued standards
Reassess control using the full IFRS 10.7 framework, not just the percentage held: potential voting rights, contractual rights, de facto control over a dispersed shareholder base, and board composition can preserve or destroy control at percentages either side of 50 percent (IFRS 10.B80). Loss of control triggers remeasurement and gain or loss recognition under IFRS 10.25 and IFRS 10.B98 instead of equity-transaction treatment. Document the before-and-after control assessment as of the transaction date.
Derecognize the subsidiary's assets, liabilities, and NCI, remeasure any retained interest at fair value, and recognize the resulting gain or loss in profit or loss (IFRS 10.25; IFRS 10.B98).
Official guidance: IFRS issued standards
The direction of the transaction determines whether NCI increases or decreases and how consideration is measured against the carrying amount of the interest transferred. In every variant the mechanics are the same: adjust the carrying amounts of the controlling and non-controlling interests to reflect their new relative interests and take the difference against parent equity (IFRS 10.B96). Deemed acquisitions and disposals through subsidiary share issues and buybacks are frequently missed because no cash passes through the parent.
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Official guidance: IFRS issued standards
IFRS 10.B96 compares the NCI adjustment with the fair value of the consideration paid or received, so deferred consideration is discounted and earn-outs or price-adjustment clauses are measured at fair value using IFRS 13 techniques. Read the sale and purchase agreement for contingent terms, settlement mechanisms, and non-cash elements such as shares of the parent. Subsequent accounting for deferred or contingent payables follows IAS 32 and IFRS 9 - document the day-one fair value separately from later remeasurements.
Measure every component of consideration - cash, deferred, non-cash, and contingent - at transaction-date fair value before calculating the IFRS 10.B96 equity adjustment.
Official guidance: IFRS issued standards
Because the parent controlled the subsidiary before and after, IFRS 10.23 treats the change as a transaction among owners: the group's net assets are unaffected and only the split of equity between parent and NCI moves. Compute the NCI adjustment from the subsidiary's existing consolidated carrying amounts, including allocated goodwill where NCI was measured at fair value at acquisition. A frequent misapplication is applying business-combination step-up accounting by analogy to IFRS 3, which applies only when control is obtained.
Reverse any fair value step-up of subsidiary assets, liabilities, or goodwill; when control is retained the change is an equity transaction with no remeasurement (IFRS 10.23; IFRS 10.B96).
Official guidance: IFRS issued standards
IFRS 10.B96 requires the entity to recognize directly in equity any difference between the NCI adjustment and the fair value of consideration, attributed to the owners of the parent. Presentation is a policy matter - retained earnings or a separate transactions-with-NCI reserve are both seen in practice - but profit or loss is never touched while control is retained. For foreign subsidiaries, a proportionate share of the cumulative translation reserve is reattributed between parent and NCI rather than recycled (IAS 21.48C).
Reverse any gain or loss recognized in profit or loss and record the difference between consideration and the NCI adjustment directly in equity attributable to owners of the parent (IFRS 10.B96).
Official guidance: IFRS issued standards
Goodwill was measured once, when control was obtained under IFRS 3; buying out NCI later is a transaction among owners under IFRS 10.23, so no new goodwill arises and existing goodwill is not remeasured. If NCI was measured at fair value at the acquisition date, the NCI balance already carries its share of goodwill, and that share transfers within equity on the buyout. Expect a larger equity debit where NCI was measured at the proportionate share of net assets, because that NCI balance carries no goodwill.
Reverse the goodwill adjustment; record the entire difference between consideration and the NCI carrying amount directly in equity (IFRS 10.23; IFRS 10.B96).
Official guidance: IFRS issued standards
IFRS 10.22 requires NCI to be presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent. After the transaction, rebuild the NCI rollforward: opening balance, share of comprehensive income to the transaction date, the IFRS 10.B96 adjustment for the interest acquired or disposed, dividends to NCI, and closing balance at the new percentage. Check that written put options over NCI shares have not been conflated with the equity balance - they need separate IAS 32.23 analysis.
Update the NCI carrying amount and its separate presentation within consolidated equity to the post-transaction relative interest (IFRS 10.22; IFRS 10.B96).
Official guidance: IFRS issued standards
IFRS 10.B94 attributes profit or loss and each component of OCI between the owners of the parent and NCI, even if that drives NCI into a deficit. For a mid-period change, cut off the subsidiary's results at the transaction date and apply each percentage to its own window; a weighted-average shortcut is acceptable only when results accrue evenly. The attribution also feeds earnings per share and the IFRS 12.12 disclosure of profit allocated to material NCI.
Recalculate the NCI share of profit or loss and OCI, applying the old percentage to the pre-transaction period and the revised percentage prospectively from the transaction date (IFRS 10.B94).
Official guidance: IFRS issued standards
IAS 7.42A classifies cash flows arising from changes in ownership interests in a subsidiary that do not result in a loss of control as financing activities, because IAS 7.42B treats them in the same way as other transactions with owners. Do not net these against acquisition or disposal flows in investing, which are reserved for obtaining or losing control (IAS 7.39). Present the amounts separately where material so users can tie them to the statement of changes in equity.
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Official guidance: IFRS issued standards
IFRS 12.18 requires a schedule showing the effects on equity attributable to owners of the parent of changes in ownership interests in a subsidiary that do not result in a loss of control, and IAS 1.106(d)(iii) requires the statement of changes in equity to present those changes separately. Disclose the percentage held before and after, the consideration, and the equity adjustment. Where the subsidiary has material NCI, refresh the IFRS 12.12 information for the new percentage.
Add the IFRS 12.18 schedule of effects on parent equity and the IAS 1.106(d)(iii) statement of changes in equity presentation before authorization.
Official guidance: IFRS issued standards
Run a final check across the whole chain: control retained (IFRS 10.7), consideration at fair value, NCI adjusted from consolidated carrying amounts, the difference in parent equity (IFRS 10.B96), goodwill untouched, attribution split at the transaction date (IFRS 10.B94), financing cash-flow classification (IAS 7.42A), and the equity schedule disclosed (IFRS 12.18). Any remeasurement or income statement effect signals an error needing correction before issuance.
Finalize the equity-transaction entries, the IAS 7.42A financing classification, and the IFRS 12.18 and IAS 1.106(d)(iii) disclosures. Reverse the remeasurement or profit or loss entries and rerecord the transaction as an equity transaction under IFRS 10.23 and IFRS 10.B96.
Official guidance: IFRS issued standards
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