consolidation adjustment entry: US GAAP vs. IFRS confusion!

[BarkyMcbark]

So, I'm hitting a snag studying for my CPA, specifically with consolidation adjustment entries under IFRS. I was watching YT video about how to do a consolidation, it's following US GAAP.

If a parent buys 90% of a sub (no sub profit, goodwill to parent), US GAAP videos say to eliminate all sub equity accounts and then record the 10% non controlling interest in a separate non controlling interest in equity account.

But I saw an IFRS example where only 90% of the sub's equity accounts were eliminated, and the remaining 10% wasn't moved to a specific NCI account.
So, I'm confused. Is the US GAAP process I learned just not allowed under IFRS?

Help me to understand this!

 

[DebitDude]

When it comes to US GAAP, you completely wipe out the subsidiary's equity and present the 10% noncontrolling interest as a separate line in equity. On the other hand, IFRS gives you a choice between two approaches: the full goodwill method, which aligns with US GAAP, or the proportionate share method. With the latter, you only eliminate 90% and keep the 10% in the subsidiary's equity. Both approaches are acceptable under IFRS, depending on which one you go with. Do you have any idea which method your example was using?

 

[chillywilly]

If I remember right, IFRS 10 lays out the rules for consolidating subsidiaries into parent companies, and it handles non-controlling interests in much the same way as US GAAP does.

Non-controlling interests (NCIs)
"A parent presents non-controlling interests in its consolidated statement of financial position within equity, separately from the equity of the owners of the parent. [IFRS 10:22]

A reporting entity attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined on the basis of present ownership interests. [IFRS 10:B94, IFRS 10:B89]

The reporting entity also attributes total comprehensive income to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. [IFRS 10:B94]"

That info was from December 2020, so unless IFRS 10 has been updated or replaced since then, I believe the method shown in the video still applies under IFRS as well. Good luck, hope this helps.