A company has 51% of the shares of a company (located in another country). In the past, this subsidiary was consolidated. The mother company had control and power.
As of today, the daughter company has filed for bankruptcy. As the finance/legal team of the mother company, we are unable to obtain figures per YE of the daughter company, and it seems we will not obtain them in time.
Is there any guidance on how to treat a loss of control after YE?
Thank you.
Yes.
ASC 810-10-40-4 states: A parent shall deconsolidate a subsidiary ... as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. While not as succinct IFRS 10.25 provides comparable guidance.
Assuming the bankruptcy led to a loss of control, if it occurred before the balance sheet date, the parent would derecognize the sub when it occured and not consolidate it at the BSD. It thus makes no difference if it has the sub's results at the BSD or not. If the bankruptcy occurs after the BSD, the parent would derecognize the sub when it occurred so, at the next BSD, it would not need its results.
Thank you - clear.
The e bankruptcy led to a loss of control, and it occurred after the balance sheet date.
At BSD, we should include the sub in the conso.
We do not have their report/figures. And we are not able to obtain them.
What should we do?
cry.
Seriously, why are the results unavailable at BSD?
We do not receive them from the team (left).
There is minimal contact.
That is not a valid reason. To deconsolidate, you need to demonstrate loss of control (power) or risk a qualified auditor opinion.
You might want to send someone there to deal with it.