UITF Abstract 31 has been superseded by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2015. For more information visit:

• icaew.com/newukgaap

Synopsis

Where an entity (A) exchanges a business or other non-monetary assets for an interest in another entity (B) there is the following accounting treatment in A’s consolidated financial statements:

• If A retains any ownership interest in the business or non-monetary assets exchanged then the retained interest should be included at its pre-transaction carrying amount;
• A’s share of net asses acquired through its interest in B should be accounted for at fair value probably leading to goodwill; 
• If the fair value of the interest received by A exceeds the book value of the business or non-monetary asset exchanged there is a gain to A – any amount unrealised goes to statement of total recognised gains and losses; 
• Any loss is to the profit and loss account.

• Read UITF Abstract 31 (PDF 23KB/5 pages)

Last updated 21 June 2015