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ACCA Strategic Professional · Strategic Business Reporting (International) · Employee benefits

Parent Co acquired Sub Co, which operates a defined benefit plan. In Parent's consolidated financial statements for the year after acquisition, Sub's actuarial loss on the plan obligation is $400,000, all arising post-acquisition. Parent owns 80% of Sub. Ignoring deferred tax, how is the loss treated in the consolidated statements?

The $400,000 actuarial loss goes to consolidated other comprehensive income, not profit or loss, and is attributed 80% to the parent's owners and 20% to non-controlling interest, since total comprehensive income is shared by ownership.

  1. ARecognised in consolidated profit or loss, split 80% to owners of the parent and 20% to NCI
  2. BRecognised in consolidated OCI, with 20% of it attributed to non-controlling interestCorrect
  3. CRecognised in consolidated OCI and wholly attributed to owners of the parent
  4. DAdjusted against goodwill at acquisition

Explanation

Remeasurements are OCI items in the group statements as in the subsidiary's own. Total comprehensive income is attributed to NCI and owners based on ownership, so $80,000 is attributed to NCI. Post-acquisition losses do not adjust goodwill.

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