Panda Corporation owns 90% of Squirrel Inc.'s outstanding common stock. The carrying value of the investment...
Panda Corporation owns 90% of Squirrel Inc.'s outstanding common stock. The carrying value of the investment in Sam is $180,000 and the fair value is $260,000. Panda sells half its Squirrel Inc. shares for $120,000. What is the carrying value of the remaining shares?
Homework Answers
Answer:
The remaining shares should be carried at its fair value.
Fair value of remaining shares = $260,000*(1-0.5) = $130,000
Explanation:
According to IFRS 3(Revised), A group may decide to sell its controlling interest in a subsidiary but retain significant influence in the form of an associate, or retain only a financial asset. If it does so, the retained interest is remeasured to fair value, and any gain or loss compared to book value is recognised as part of the gain or loss on disposal of the subsidiary.
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