When a parent entity has previously held an investment in a subsidiary prior to gaining control the effect on the consolidation process is as follows:
A)there is no impact
B)the change in the fair value of the previously held interest is recognised in profit or loss
C)the change in the fair value of the previously held interest is recognised in retained earnings
D)the change in the fair value of the previously held interest is recognised in other comprehensive income

Question

Quizplus · Accepted Answer

The change in the fair value of the previously held interest is recognised in profit or loss because it is an unrealised gain or loss.

When a Parent Entity Has Previously Held an Investment in a Subsidiary