Is Acquisition of Non-Controlling Shares Treasury Stock?

Abstract

The International Financial Reporting Standard (IFRS) introduced a new concept of Entity for accounting purposes in the consolidated financial statement: they started to include in equity two values: the controlling entity and the non-controlling interest in the consolidated financial statement. As a result, it started to treat the additional acquisition of non-controlling shares as a procedure similar to the acquisition of treasury stocks, which leads to classifying the (non)appreciation and goodwill as reducers of the consolidated equity.
The IFRS did not regulate anything in terms of the individual or separate balance sheet. However, Brazil, via ICPC09, in its eagerness to maintain equity and net income equal in the consolidated and the individual (not required by the IASB), determined the same procedure for the individual balance sheet.
What we are trying to show here is that this Brazilian initiative, in view of a more detailed analysis and the experience acquired, does not offer the most true and fair view possible of the economic reality of the individual entity (in fact, debatable even in the consolidated balance sheet).
Thus, our proposition is that we redo the Brazilian standard and discuss the IFRS with the IASB.