Loss of explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A parent that changes its stake in a subsidiary must first ask one question: does it still control the entity afterwards? If yes, the change is a transaction between owners and goes through equity. If no, the subsidiary is removed from the consolidated statements and a gain or loss is recognised in profit or loss.
Changes in a parent's ownership that do not end control are equity transactions (Ind AS 110, paragraph 23): the NCI is adjusted for its changed share and any difference to the price paid or received goes straight to equity, with no goodwill and no profit or loss. When control is lost, the parent derecognises the subsidiary's assets, liabilities and NCI, recognises the retained interest at fair value, reclassifies related OCI, and records the gain or loss in profit or loss (paragraph 25, B98).
Ind AS as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015). Amendments notified after 1 April 2025 are not reflected in this article; check mca.gov.in before applying it to a later period.
What the paragraphs require
| Paragraph | Requirement | What it means in practice |
|---|---|---|
| Ind AS 110, 23 | Changes in ownership without loss of control are equity transactions | No goodwill, no gain or loss |
| B96 | Adjust the controlling and non-controlling interests for their changed relative shares; difference to fair value of consideration goes directly to equity, attributed to owners of the parent | The NCI moves at its carrying amount, not at the price |
| 25 | On loss of control: derecognise assets and liabilities, recognise retained investment at fair value, recognise the gain or loss attributable to the former controlling interest | The retained stake starts afresh at fair value |
| B97 | Several arrangements may be one transaction if made together, designed for one commercial effect, interdependent or only justified together | Check linked sales before treating them separately |
| B98 | Derecognise assets (including goodwill), liabilities and the NCI carrying amount including its OCI; recognise consideration and retained investment; reclassify OCI; the difference is a gain or loss | The full formula |
| B99 | OCI is treated as if the parent had disposed of the assets directly | Reclassify, or transfer within equity where other standards require |
| 25(b) | The retained interest's fair value is the cost of an associate or joint venture, or the initial fair value of a financial asset | Equity method or Ind AS 109 follows |
Part 1: changes that keep control
When a parent buys from or sells to the NCI and remains in control, nothing new is acquired or disposed of from the group's point of view. The NCI is adjusted to reflect its new share of the subsidiary's net assets, at the carrying amount including the NCI share of any goodwill if it was measured at fair value. The difference between that adjustment and the price goes to equity (B96). It does not touch profit or loss and does not change goodwill. Our guide to consolidation procedure shows how the NCI is first measured.
Part 2: loss of control
Control can end through a sale, a dilution, the lapse of a right or an event outside the parent's hands. Start from the control tests, covered in our guide to assessing control. If the sale is in steps, test whether the steps are one transaction using the four indicators in B97. If they are, the total is treated as one disposal of control.
The gain or loss is the fair value of consideration received, plus the fair value of the retained interest, plus the carrying amount of the NCI derecognised, plus OCI reclassified to profit or loss as a gain (less if a loss), minus the carrying amount of the subsidiary's assets, including goodwill, less liabilities (B98).
Deal teams often ask for the accounting outcome while still negotiating. Our financial statement preparation team can model the gain and the retained stake before the terms are fixed.
Worked example
The entity and all figures in this example are invented for illustration. Amounts are in ₹ lakh. Fair values and prices are assumed, for arithmetic only. Tax on the sale is not covered; see our income-tax guides.
Vamsadhara Holdings Limited owns 70 per cent of Rushikulya Plastics Limited. In the consolidated statements, the subsidiary's identifiable net assets stand at ₹1,000.00 lakh and goodwill is ₹120.00 lakh. The NCI was measured at the proportionate share of identifiable net assets, so goodwill belongs entirely to the parent and the NCI is 30 per cent x 1,000.00 = ₹300.00 lakh.
Step 1: buying 10 per cent from the NCI (control kept). Vamsadhara pays ₹130.00 lakh cash for a further 10 per cent. The NCI's carrying amount falls by 10 ÷ 30 x 300.00 = ₹100.00 lakh. The excess of price over that is 130.00 - 100.00 = ₹30.00 lakh, charged to equity (paragraph 23, B96).
| Particulars | Debit (₹ lakh) | Credit (₹ lakh) |
|---|---|---|
| Non-controlling interests | 100.00 | |
| Equity attributable to owners of the parent | 30.00 | |
| To Bank | 130.00 |
Check: debits 130.00 equal the credit 130.00. Holding is now 80 per cent and the NCI is 20 per cent, 200.00. Goodwill remains ₹120.00 lakh and profit or loss is untouched.
Step 2: selling 50 per cent (control lost). During the following months the subsidiary earns ₹100.00 lakh, shared 80:20, so identifiable net assets rise to ₹1,100.00 lakh and the NCI to 200.00 + 20.00 = ₹220.00 lakh. A cumulative translation gain of ₹25.00 lakh in the parent's OCI relates to the subsidiary and would be reclassified on a direct disposal of its assets (B99). Vamsadhara sells 50 per cent for ₹700.00 lakh cash and keeps 30 per cent, which has a fair value of ₹420.00 lakh. It no longer controls Rushikulya, so the sale is a loss of control. The two steps are separate transactions in this example: they were not linked by terms or pricing (B97).
| Gain on loss of control | ₹ lakh |
|---|---|
| Consideration received | 700.00 |
| Fair value of retained 30% | 420.00 |
| Carrying amount of NCI derecognised | 220.00 |
| Subtotal | 1,340.00 |
| Less identifiable net assets derecognised | (1,100.00) |
| Less goodwill derecognised | (120.00) |
| Gain before OCI | 120.00 |
| Add OCI reclassified (translation gain) | 25.00 |
| Gain in profit or loss | 145.00 |
| Particulars | Debit (₹ lakh) | Credit (₹ lakh) |
|---|---|---|
| Bank | 700.00 | |
| Investment in former subsidiary (retained 30%, at fair value) | 420.00 | |
| Non-controlling interests | 220.00 | |
| Foreign currency translation reserve (OCI) | 25.00 | |
| To Identifiable net assets of subsidiary (assets less liabilities) | 1,100.00 | |
| To Goodwill | 120.00 | |
| To Gain on loss of control (profit or loss) | 145.00 |
Check: debits 700.00 + 420.00 + 220.00 + 25.00 = 1,365.00; credits 1,100.00 + 120.00 + 145.00 = 1,365.00.
Cross-check by components. The parent's share of carrying amounts is 80 per cent x 1,100.00 + 120.00 = ₹1,000.00 lakh. The part sold is 50 ÷ 80 = 625.00 and the part kept is 30 ÷ 80 = 375.00. Gain on the part sold is 700.00 - 625.00 = 75.00; remeasurement of the part kept is 420.00 - 375.00 = 45.00; OCI is 25.00. The sum is 75.00 + 45.00 + 25.00 = ₹145.00 lakh, the same figure.
After the sale. The 30 per cent stake of ₹420.00 lakh is the cost of an associate if Vamsadhara has significant influence (paragraph 25(b)), accounted for under the equity method (see our guide to the equity method under Ind AS 28). Otherwise it is a financial asset at fair value under Ind AS 109. Amounts owed by or to the former subsidiary are accounted for under the relevant Ind AS from that date (paragraph 25(b)).
Presentation and disclosure
Equity transactions with the NCI appear in the statement of changes in equity. The gain is presented in profit or loss and is attributable to the parent. The standard's outline is in our Ind AS 110 post.
Common mistakes
- Recognising goodwill or a gain on a purchase from the NCI while control is kept (paragraph 23).
- Moving the NCI at the price paid instead of its carrying amount (B96).
- Forgetting to derecognise the NCI together with its OCI (B98(a)(ii)).
- Leaving the retained stake at its old carrying amount instead of fair value (paragraph 25(b)).
- Not testing whether two sales are one arrangement (B97).
- Leaving OCI in equity when the same items would be reclassified on a direct disposal (B99).
Need help with ownership changes and deconsolidation?
Part sales, step-downs and dilutions need a clear date of loss of control, a fair value for the retained stake and a reclassification schedule for OCI. Our financial statement preparation team can prepare those workings alongside your finance team.
Key takeaways
- If control is kept, the change is an equity transaction with no profit or loss.
- The NCI is adjusted at its carrying amount; the difference to price goes to equity.
- On loss of control derecognise assets, goodwill, liabilities and the NCI.
- The retained stake is measured at fair value and becomes the cost of the new investment.
- OCI is reclassified as if the assets had been sold.
- Test linked arrangements before splitting a sale.
Read next
- Consolidation procedure under Ind AS 110: goodwill, NCI and elimination of intra-group items
- The equity method under Ind AS 28
- Business combination under Ind AS 103: acquisition method, purchase price allocation, goodwill and NCI
Disclaimer: Based on the Indian Accounting Standards as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015) and, where named, the ITFG clarification bulletins of ICAI, as consulted on 4 October 2026. The worked example uses invented figures. Amendments notified after 1 April 2025 should be checked on mca.gov.in. This article is general information, not legal advice; check the official text before acting.