Practical examples of changes in ownership interest in consolidated statements

Starting with real examples of changes in ownership interest in consolidated statements

Textbook definitions are fine, but accountants learn fastest from transactions they can actually picture. The best examples of changes in ownership interest in consolidated statements tend to fall into three broad buckets:

• The parent keeps control but adjusts its percentage (step‑ups or sell‑downs).
• The parent gains control of an investee (moves from associate or joint venture to subsidiary).
• The parent loses control and deconsolidates.

Each category has different consequences for equity, non‑controlling interests (NCI), and profit or loss. Below, we walk through concrete examples of examples of changes in ownership interest in consolidated statements, using simple numbers so you can see exactly what moves and where.

Accounting note: The discussion is aligned with IFRS 10 / IFRS 3 and, at a high level, with U.S. GAAP guidance in ASC 810 (Consolidation) and ASC 805 (Business Combinations). For deeper technical reading, see the IFRS Foundation’s consolidation overview at ifrs.org and the FASB’s consolidation guidance at fasb.org.

Example of increasing ownership while retaining control (equity transaction)

Imagine ParentCo owns 70% of SubCo and already consolidates it. The remaining 30% is NCI. SubCo’s net assets (fair value of equity) are $1,000.

ParentCo decides to acquire another 10% from the non‑controlling shareholders for $150. After the transaction, ParentCo owns 80% and NCI is 20%. Control never changes hands.

Under IFRS 10 and ASC 810, this is treated as an equity transaction:

• No gain or loss is recognized in profit or loss.
• The carrying amount of NCI is reduced.
• The difference between consideration paid and the adjustment to NCI goes directly to equity attributable to the parent.

Suppose NCI’s carrying amount before the deal is \(300 (30% of \)1,000). After buying 10%, NCI should be 20% of \(1,000, or \)200. That means NCI decreases by $100.

ParentCo pays $150 cash, so:

• NCI decreases by $100.
• Parent equity decreases by $50 (the “premium” over NCI’s book value).
• Cash decreases by $150.

In the consolidated statement of changes in equity, you’ll see:

• A line for “Acquisition of additional interest in subsidiary without loss of control.”
• A $100 reduction in NCI.
• A $50 reduction in parent equity.

This is one of the simplest examples of changes in ownership interest in consolidated statements that does not touch the income statement.

Example of selling down ownership but keeping control

Reverse the situation. ParentCo owns 80% of SubCo (net assets still \(1,000) and sells 10% to outside investors for \)130. After the sale, ParentCo holds 70%, NCI holds 30%. Control is still clearly with ParentCo.

Carrying amount of NCI before the sale is \(200 (20% of \)1,000). After the sale, NCI should be \(300 (30% of \)1,000). So NCI increases by $100.

ParentCo receives $130 cash. The entry in consolidated books is:

• Increase NCI by $100.
• Increase parent equity by $30 (the excess of proceeds over the increase in NCI).
• Increase cash by $130.

Again, no gain or loss hits profit or loss. The gain is captured within equity, not in the income statement. In the consolidated statement of changes in equity, you’ll see the sale reflected as a transaction with owners.

This is another clear example of changes in ownership interest in consolidated statements where control is retained and the transaction is purely within equity.

Step acquisition: gaining control of an associate

Now let’s move to a more dramatic scenario: ParentCo owns 30% of InvestCo, accounted for using the equity method as an associate. The carrying amount of the investment is \(300. ParentCo then buys another 40% for \)600, moving to 70% and gaining control.

Fair value of InvestCo’s identifiable net assets at the acquisition date is $1,200.

Under IFRS 3 and ASC 805, this is a business combination achieved in stages (step acquisition). Here’s the key twist:

• The previously held 30% interest is remeasured to fair value.
• Any resulting gain or loss goes to profit or loss.
• A full purchase price allocation is performed, and goodwill (or a bargain purchase gain) is recognized.

Assume the fair value of the old 30% at the date of control is \(360. The carrying amount is \)300, so ParentCo recognizes a $60 gain in the income statement:

• Dr Investment in InvestCo $60
• Cr Gain on remeasurement of previously held interest $60

Then ParentCo records the business combination:

• Consideration transferred: $600 (for the new 40%).
• Fair value of previously held interest: $360.
• Fair value of NCI (30%) say $360.
• Implied total fair value of InvestCo: $1,320.
• Net identifiable assets: $1,200.
• Goodwill: $120.

In the consolidated financial statements, you now see:

• A new subsidiary line for InvestCo’s assets and liabilities.
• A gain in the income statement from remeasurement.
• Goodwill on the balance sheet.

Among the best examples of changes in ownership interest in consolidated statements, step acquisitions are the ones analysts watch closely, because that remeasurement gain can be large and can distort year‑over‑year earnings trends.

For more on business combinations achieved in stages, the IFRS Foundation provides technical summaries and standards text at ifrs.org.

Loss of control: partial disposal that triggers deconsolidation

Now flip the script. ParentCo owns 80% of SubCo, which it consolidates. The carrying amount of SubCo’s net assets is \(1,000, including goodwill. NCI is \)200.

ParentCo sells 50% of SubCo for $700, dropping its stake from 80% to 30%. At 30%, ParentCo no longer controls SubCo but still has significant influence. SubCo becomes an associate, accounted for using the equity method.

This is not an equity transaction. It is a loss of control event, and the accounting looks very different from the earlier examples of changes in ownership interest in consolidated statements:

• ParentCo derecognizes SubCo’s assets and liabilities.
• ParentCo derecognizes NCI.
• ParentCo recognizes any retained interest at fair value (say the 30% retained is worth $420).
• A gain or loss on disposal goes to profit or loss.

Assume the carrying amount of SubCo’s net assets attributable to the group (including goodwill) is \(1,000 and NCI is \)200. On disposal, ParentCo recognizes:

• Cash received: $700.
• Fair value of retained 30%: $420.
• Less: net assets of SubCo (\(1,000) and NCI (\)200).

Gain on loss of control = \(700 + \)420 − \(1,000 − \)200 = \((80) (an \)80 loss) or, if the numbers swing the other way, a gain.

That gain or loss sits in the income statement, and the newly recognized investment in associate (the 30%) appears as a single line on the consolidated balance sheet.

Spin‑off or carve‑out IPO: bringing in public shareholders

A very current 2024–2025 trend is large groups carving out subsidiaries via IPOs or spin‑offs. Think of tech companies floating their cloud or payments units, or industrial groups spinning off their energy businesses.

Suppose ParentCo owns 100% of SpinCo and decides to float 30% in an IPO while keeping 70% and retaining control.

• Before IPO: no NCI, full consolidation.
• After IPO: 70% ParentCo, 30% public shareholders as NCI.

If ParentCo sells 30% of SpinCo for \(900 and SpinCo’s net assets have a carrying amount of \)2,000, the transaction is treated as an equity transaction because control is retained.

• NCI is recognized at its proportionate share of net assets: 30% of \(2,000 = \)600.
• Cash received: $900.
• The difference ($300) is recognized directly in parent equity.

Nothing hits profit or loss. In the consolidated statement of changes in equity, you’ll see:

• An increase in NCI of $600.
• An increase in parent equity of $300.

This kind of carve‑out is one of the best examples of changes in ownership interest in consolidated statements that can dramatically change the equity section without touching the income statement.

Structured deal: selling down but keeping control through rights or options

Modern deal‑making often includes call options, put options, or shareholder agreements that give the parent power beyond its bare percentage of shares. Under IFRS 10 and ASC 810, control is about power over relevant activities, not just majority shareholding.

Consider ParentCo owns 55% of SubCo, with 45% held by investors. ParentCo sells 20% to an institutional investor, apparently dropping to 35%. But as part of the deal, ParentCo retains:

• A call option to repurchase the 20% at a fixed price.
• Voting agreements giving it a majority of board seats.

SubCo’s net assets are \(500. ParentCo sells the 20% for \)150. Because ParentCo still controls SubCo through contractual rights, the transaction is treated as an equity transaction, not a loss of control.

• NCI increases to reflect the new 65% outside ownership.
• The difference between proceeds and NCI adjustment goes to parent equity.
• No gain or loss in profit or loss.

This is a more nuanced example of changes in ownership interest in consolidated statements where legal ownership drops below 50%, but consolidation continues because the parent retains power.

For more background on the concept of control, the IFRS Foundation’s consolidation guidance at ifrs.org is a good starting point.

Trend watch 2024–2025: where these examples show up in practice

If you scan recent SEC filings on sec.gov, you’ll see these patterns recurring in real examples of changes in ownership interest in consolidated statements:

• Private equity roll‑ups increasing stakes in portfolio companies over time, triggering step acquisitions and remeasurement gains.
• Tech and pharma alliances where joint ventures become subsidiaries once one party gains control of IP or decision‑making.
• De‑SPAC transactions where legacy shareholders sell down but often retain control through voting arrangements.
• Carve‑out IPOs in sectors like healthcare, energy transition, and fintech, creating large NCI balances overnight.

Analysts increasingly adjust reported earnings for large gains or losses from loss of control or step acquisitions, especially when these are non‑recurring. Understanding these examples of changes in ownership interest in consolidated statements helps you separate operating performance from one‑off transaction noise.

How these transactions appear across the consolidated statements

Across all the examples above, the pattern is consistent:

• When control is retained (buying more or selling some, spin‑off while keeping control, structured deals with rights):

  • Changes are recorded within equity.
  • NCI is adjusted.
  • No gain or loss in profit or loss.

• When control is gained (step acquisition):

  • Previously held interest is remeasured to fair value.
  • A gain or loss goes to profit or loss.
  • Goodwill or bargain purchase gain is recognized.

• When control is lost (partial disposal to associate or financial asset):

  • Subsidiary’s assets and liabilities are derecognized.
  • NCI is derecognized.
  • Retained interest is recognized at fair value.
  • Gain or loss goes to profit or loss.

If you’re reviewing a set of group financials and want to understand the impact of a transaction, go straight to:

• The consolidated statement of changes in equity for equity transactions.
• The notes on disposals, business combinations, and NCI for detail.
• The segment note to see how the transaction affected reported segments.

These notes usually contain the clearest real examples of changes in ownership interest in consolidated statements for that particular group.

FAQ: examples of changes in ownership interest in consolidated statements

Q1. What are the most common examples of changes in ownership interest in consolidated statements?
Common examples include a parent buying additional shares in a subsidiary it already controls, selling a portion of its interest while keeping control, step acquisitions where an associate becomes a subsidiary, carve‑out IPOs that introduce NCI, and partial disposals where a subsidiary becomes an associate or financial asset.

Q2. Can you give an example of a change in ownership that does not affect profit or loss?
Yes. If a parent increases its ownership in a subsidiary from 60% to 75% by buying shares from non‑controlling shareholders, and control is already in place, the transaction is recorded entirely within equity. NCI decreases, parent equity adjusts for any difference between consideration and NCI’s carrying amount, and there is no gain or loss in the income statement.

Q3. What is an example of a change in ownership that does affect profit or loss?
A classic example of changes in ownership interest in consolidated statements that affect profit or loss is a step acquisition. When a parent moves from a 30% associate to a 70% subsidiary, the previously held 30% is remeasured to fair value. Any gain or loss from that remeasurement is recognized in profit or loss, and goodwill is calculated based on the total fair value of the business.

Q4. How are spin‑offs and carve‑out IPOs reflected in consolidated statements?
If the parent retains control after the spin‑off or IPO, the transaction is treated as an equity transaction. NCI is recognized or increased, and any difference between proceeds and the share of net assets transferred to NCI is recorded in parent equity. If the parent loses control, the transaction is treated as a disposal with gain or loss in profit or loss and derecognition of assets, liabilities, and NCI.

Q5. Where can I find real‑world examples of these transactions?
Public companies disclose them in their annual and quarterly reports, especially in the notes on business combinations, disposals, and NCI. You can search recent U.S. filings on the SEC’s EDGAR system at sec.gov and compare how different companies present similar examples of changes in ownership interest in consolidated statements.