# Consolidating a thirteen-entity group through a mid-year sale of a majority stake Case study · Financial Reporting A group sold a controlling stake in part of its business during the year, turning a routine consolidation into a sequence of remeasurements across subsidiaries and associates. 13 Entities consolidated, including subsidiaries and associates 1 Mid-year loss of control, accounted for from the transaction date 3 Reconciliations closed: equity, non-controlling interests, and cash flows ## The situation A group of thirteen entities sold a majority stake in one part of its business during the year. That investee stopped being a subsidiary and became an associate, and ownership in other entities shifted as a result. The consolidated statements had to reflect each change from the date it took effect. ## The challenge - Consolidating the former subsidiary only up to the date control was lost - Derecognising its assets, liabilities, and non-controlling interest, and remeasuring the retained stake at fair value - Equity accounting for the retained interest from the date control was lost - Reconciling changes in equity, non-controlling interests, and consolidated cash flows across the group ## What we did We mapped each entity’s ownership and control before and after the transaction, including the date every change took effect and the accounting it triggered. The loss of control was accounted for on the IFRS 10 model, as adopted in Ind AS 110. The subsidiary’s results were consolidated to the transaction date. Its net assets and non-controlling interest were derecognised, the consideration and the fair value of the retained interest were recognised, and amounts in other comprehensive income were reclassified as the standards require. The resulting gain was calculated and supported in a single schedule. Non-controlling interests and consolidated equity were reconciled from opening to closing balances, and the consolidated cash flow statement showed the net cash effect of losing control within investing activities. ## The impact - Consolidated statements reflecting each ownership change from its effective date - A gain on loss of control backed by a traceable calculation - Equity, non-controlling interest, and cash flow reconciliations with no unexplained differences Client details are anonymised, and some facts are generalised to protect confidentiality. **Industry** [Diversified group](https://soniassociates.in/industry-manufacturing) **Capability** [Financial Reporting & Technical Accounting](https://soniassociates.in/service-financial-reporting) **Geography** India **Duration** Year-end reporting cycle **Standards and frameworks** IFRS 10, IAS 28 and IAS 7, as adopted in Ind AS · Non-controlling interests ## More client impact [All client impact](https://soniassociates.in/case-studies) Technology · Financial Reporting ### [Rebuilding an expected credit loss model for a listed IT services company with US$855 million in receivables](https://soniassociates.in/case-ecl-model-listed-it-services) US$855mn Gross trade receivables covered by the model Energy & Infrastructure · Financial Reporting ### [Converting a six-SPV renewable energy platform to IFRS-converged Ind AS, entity by entity and on consolidation](https://soniassociates.in/case-ind-as-conversion-renewable-platform) 6 SPVs converted to Ind AS at the same time Consumer & Retail · Finance Transformation ### [Removing recurring cash shortages across a highway fuel retail network](https://soniassociates.in/case-fuel-retail-finance-transformation) ~99% Reduction in recurring cash shortages by the third iteration ## Facing a comparable situation Describe it in a few lines. We will say whether we are the right firm to help. [Contact us](https://soniassociates.in/contact?topic=financial-reporting) [LinkedIn](https://www.linkedin.com/in/in-aditya/) --- Soni Aditya & Associates, Chartered Accountants. Office No 502, Unit 507, 5th Floor, 45 Baner Street, Baner, Pune, Maharashtra 411045, India. aditya@soniassociates.in · +91 93400 75288 · https://soniassociates.in/contact This website is published for general information, in keeping with the guidelines of the Institute of Chartered Accountants of India on members’ websites. It does not advertise or solicit work, and nothing on it is professional advice. Publications reflect the law and standards at the date they were written, so please take advice on your own facts before acting. Client engagements described here are anonymised. Site index for agents: https://soniassociates.in/llms.txt Canonical page: https://soniassociates.in/case-consolidation-thirteen-entity-group