This free, guided checker walks your finance team through the key decision points for IFRS 10 Loss of Control and Deconsolidation. 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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Loss of control occurs when the investor no longer has power over relevant activities, exposure to variable returns, and ability to use power to affect returns, such as through disposal or loss of voting rights.
Continue consolidating under IFRS 10.20; account for any ownership change that does not result in loss of control as an equity transaction under IFRS 10.23.
Official guidance: IFRS issued standards
Partial disposals that reduce ownership without retaining control require remeasurement of the retained interest and deconsolidation accounting even when some shares remain held.
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Official guidance: IFRS issued standards
A retained interest may be an associate, joint venture, or financial asset depending on the remaining rights and level of influence after the transaction.
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Official guidance: IFRS issued standards
IFRS 10.25 requires remeasurement of any retained interest to fair value at the date control is lost, with fair value gain or loss recognized in profit or loss as part of the deconsolidation gain or loss.
Remeasure the retained interest to fair value at the date control is lost, as required by IFRS 10.25(b), before completing deconsolidation entries.
Official guidance: IFRS issued standards
The calculation includes consideration received, fair value of retained interest, and derecognition of subsidiary assets, liabilities, goodwill, and non-controlling interests at their carrying amounts.
Complete every component of the IFRS 10.25(c) and B98 gain or loss computation before posting deconsolidation entries.
Official guidance: IFRS issued standards
IFRS 10.B99 requires reclassification to profit or loss of OCI amounts that would be reclassified upon disposal of related assets or liabilities, such as foreign currency translation reserves.
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Official guidance: IFRS issued standards
When significant influence is retained after loss of control, the fair value at loss-of-control date becomes the initial cost for equity-method accounting going forward.
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Official guidance: IFRS issued standards
The remeasured fair value at loss of control is the deemed cost for subsequent equity-method accounting, with a new purchase-price allocation for basis differences on the retained stake.
Commence equity-method accounting from the loss-of-control date using fair value as deemed cost per IFRS 10.25(b) and IAS 28.32 before the next reporting date.
Official guidance: IFRS issued standards
Consideration includes cash and non-cash proceeds at fair value; incremental costs directly attributable to the disposal reduce the gain or increase the loss recognized on loss of control.
Include the fair value of all consideration received and directly attributable disposal costs in the IFRS 10.B98 gain or loss computation.
Official guidance: IFRS issued standards
Cash received from losing control of a subsidiary is classified as investing activities net of cash and cash equivalents disposed of with the subsidiary.
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Official guidance: IFRS issued standards
Disclosures include the nature of the loss of control, gain or loss recognized, fair value of retained interest, and remaining involvement with the former subsidiary.
Finalize deconsolidation entries, IAS 7.39 cash flow presentation, and IFRS 12.19 disclosures. Prepare the IFRS 12.19 gain or loss and retained-interest disclosures before the financial statements are authorized for issue.
Official guidance: IFRS issued standards
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