Chapter 7 — Changes in a Parent’s Ownership Interest

7.2 Changes in a Parent’s Ownership Interest With an Accompanying Change in Control

ASC 810-10

40-4 A parent shall deconsolidate a subsidiary or derecognize a group of assets specified in paragraph 810-10-40-3A as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. See paragraph 810-10-55-4A for related implementation guidance.

40-4A When a parent deconsolidates a subsidiary or derecognizes a group of assets within the scope of paragraph 810-10-40-3A, the parent relationship ceases to exist. The parent no longer controls the subsidiary’s assets and liabilities or the group of assets. The parent therefore shall derecognize the assets, liabilities, and equity components related to that subsidiary or group of assets. The equity components will include any noncontrolling interest as well as amounts previously recognized in accumulated other comprehensive income. If the subsidiary or group of assets being deconsolidated or derecognized is a foreign entity (or represents the complete or substantially complete liquidation of the foreign entity in which it resides), then the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that foreign entity. For guidance on derecognizing foreign currency translation adjustments recorded in accumulated other comprehensive income, see Section 830-30-40.

A change in ownership interest in a subsidiary is one of many ways a parent may cede control of that subsidiary. Upon a loss of control, the parent must derecognize in its consolidated financial statements the subsidiary’s assets, liabilities, and components of equity (including noncontrolling interests). Appendix F of Deloitte’s Roadmap Consolidation — Identifying a Controlling Financial Interest provides in-depth guidance on considerations for reporting entities upon the deconsolidation of a subsidiary, including SEC disclosure requirements that are applicable in such circumstances.

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.