24 February 2021
Holding company had 80% shares in previous year and 96.6% shares in current year in subsidiary. How should the comparative figures for previous year be disclosed ; considering 96.6% shares or 80% shares?
06 July 2024
When presenting comparative figures in financial statements, the disclosure should be consistent with the ownership percentages for each respective period. Here’s how you should approach it:
1. **Previous Year (80% Ownership):** - For the period when the holding company had 80% shares in the subsidiary, the financial statements should reflect figures based on that ownership percentage. - This includes the balance sheet, income statement, and cash flow statement for the previous year. All disclosures and notes related to subsidiaries should also reflect the 80% ownership.
2. **Current Year (96.6% Ownership):** - For the current year, where the holding company holds 96.6% shares in the subsidiary, all financial statements should reflect the updated ownership percentage. - This includes consolidated financial statements, where applicable, showing the subsidiary as a fully consolidated entity with its financial results fully included in the holding company's financial statements.
### Specific Considerations:
- **Balance Sheet:** Assets, liabilities, and equity should be adjusted based on the ownership percentage applicable for each period.
- **Income Statement:** Revenue, expenses, and net income should reflect the percentage of ownership for each respective period.
- **Cash Flow Statement:** Cash flows from operating, investing, and financing activities should also be adjusted accordingly.
- **Notes to Financial Statements:** Disclosures related to subsidiaries, including significant accounting policies, method of consolidation (if applicable), and any other relevant information, should clearly state the ownership percentages for each period.
### Example:
- If the holding company had 80% ownership in the previous year, all financial statements and related disclosures should reflect this ownership structure. - In the current year, where ownership has increased to 96.6%, the comparative figures for the previous year should not be restated to reflect the higher ownership percentage unless restatement is required under specific regulatory or accounting standards.
### Conclusion:
To maintain consistency and comparability in financial reporting, it’s crucial to disclose comparative figures based on the ownership percentages applicable to each period. This approach ensures that stakeholders can effectively analyze and understand the financial performance and position of the holding company and its subsidiaries over time.
CAclubindia
