How Do You Answer Group Disposal Questions in ACCA SBR?
Disposals are one of the trickiest SBR group topics — the accounting turns on whether control is lost. Here's how to handle full and partial disposals and calculate the group gain.
Group disposals are among the most demanding topics in ACCA SBR, because the accounting depends entirely on one question: does the parent still control the subsidiary after the disposal? Get that judgement right and the mechanics follow; get it wrong and the whole answer unravels. This is exactly the kind of applied judgement SBR is built to test.
First decide: is control lost?
Every disposal question starts here. If the parent sells enough to lose control, the subsidiary is deconsolidated and a group profit or loss on disposal is calculated. If control is retained — a sale from, say, 90% to 70% — there is no disposal in group terms; it's a transaction between owners, accounted for in equity. Identifying which applies is the pivotal mark.
Rule 1: Full disposal — calculate the group gain
On a full disposal, the group gain or loss is the proceeds received, less the carrying amount of what's derecognised — the subsidiary's net assets at disposal plus goodwill, less the non-controlling interest derecognised. Any amounts in other comprehensive income relating to the subsidiary are also reclassified. Set this out as a clear working; own-figure marks carry through.
Rule 2: Partial disposal keeping control — go to equity
Where control is retained, no gain goes to profit or loss. Instead, the difference between the proceeds and the adjustment to the non-controlling interest is recognised directly in the parent's equity. Candidates routinely — and wrongly — book a profit here; recognising that it's an equity transaction is the mark.
Rule 3: Partial disposal losing control — remeasure the retained interest
If the parent goes from control to holding an associate or investment, it derecognises the subsidiary, recognises the gain on disposal, and remeasures any retained interest to fair value at the date control is lost — that fair value becomes the new carrying amount going forward. Missing the remeasurement is a common error.
Rule 4: Watch the timing
For a mid-year disposal, the subsidiary's results are consolidated only up to the date control is lost, time-apportioned. Consolidating a full year's profit for a subsidiary sold halfway through is an easy, avoidable slip.
The takeaway
Disposal questions turn on whether control is lost: full disposal gives a group gain, retained control goes to equity, and losing control triggers a remeasurement of the retained interest. Decide the control question first, then apply the right mechanics and time-apportion.
The hard part is that a disposal answer looks internally consistent even when the control judgement — and therefore the whole treatment — is wrong. The 50% Club marks your practice SBR answers against the official ACCA scheme, showing exactly where the control conclusion or the disposal working cost you a mark.