How to Record Step Acquisition Gain
Adjusting the carrying value of a previously held equity interest to fair value upon achieving control.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Investment in Subsidiary | Asset | 250,000.00 | - |
| Investment in Associate | Asset | - | 200,000.00 |
| Gain on Remeasurement of Equity Interest | Revenue | - | 50,000.00 |
💡 Accountant's Note
When an entity obtains control of an investee in a stage-by-stage acquisition, it must remeasure its previously held equity interest at its acquisition-date fair value and recognize the resulting gain or loss in profit or loss.
Practitioner & Systems Framework
💻 ERP Architecture
The 'Investment in Associate' account is cleared and the total fair value is consolidated into the subsidiary investment account.
⚠️ Audit Flags
Significant gains recognized on the date control is obtained; lack of independent valuation for the previous interest.
📄 Required Documentation
Fair value appraisal report for the previous interest and documentation of the date control was transferred.
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