Where a parent entity with a controlling interest in a subsidiary obtains additional equity,the carrying amounts of the controlling and non-controlling interests should be adjusted to reflect the changes in their relative interests in the subsidiary.Any difference between the fair value paid and the carrying amount of the additional interest acquired is recognised directly in profit or loss of the parent entity.

Question

Quizplus · Accepted Answer

The difference between the fair value paid and the carrying amount of the additional interest acquired is recognized in equity, not in the profit or loss of the parent entity. This adjustment reflects the parent's increased investment in the subsidiary without impacting the consolidated profit or loss.

Where a Parent Entity with a Controlling Interest in a Subsidiary