1. avatar says

    Dear Mike I am confused in respect to M vs V!
    In the last example you did it another way and I did this one the same way. Can you please point out what did I go wrong here??
    M in V
    COI (80000*80%) 64000
    Value of NCI inv (61360*12% ie. our Nci) 14160
    FV of SNA at DOA
    SC 70000
    RE + Profit of 1 year 48000
    M’s share 118000*60%*80% (56640)
    – Impairment @ 10% (2152)
    Goodwill 19368

  2. avatar says

    With respect to w2 and w3 / (M vs V): I am confused by the rational of the goodwill split. If we had not the information on the NCI, the total goodwill would be attributed to the parent (full 736), which would also be consistent to the approach in the previous example.

    Now, as we know the FV of the NCI and use it in w2, we do split the goodwill and in w3 its impairment to the NCI and the parent. However, 52% of the NA @DOA (52% of 118,000 = 61,360) are exactly the FV of the NCI. Why is there anyway some goodwill and Impairment attributed to the NCI, although there is no difference in the NCI and NA valuation? Many thanks for your answer and help.

  3. avatar says

    thanks mike for helping me out understanding it . I was really tensed since 3 days i was hearing your EACH word of video very carefully so that i get clue out of it…i m relaxed now uptill complext structure…

    one thing i want to know more…we deducted it from any of subsidary or sub subsidary..but fundamentally it should be deducted from which area subsidary or sub subsidary.?? and if it is sub subsidary….then let me know generally!!….when user of financial statements sees it and find that investment of NCI is 40% but under this account its allocated 52% profit ….dont you think it wont present fair picture????

  4. avatar says

    hi mike….

    yeah your correct about w 4b that for soci ……

    actually i am little confused….i saw this video lecture and then i saw video lecture of example 4 part b…….

    in example 3 you deducted indirect investment 20% of 60 from vitalis NCI which is sub subsidary……BUT when i saw video lecture of example 4 part b…..u deducted indirect investment from….kristina which is subsidary…..

    please dont mind…i am asking too much from you same thing again and again

    • Profile photo of MikeLittle says

      @syedwaqar, You know – you’re correct! I need to amend one of them so that the answers are consistent.

      However, if you think about it, it really doesn’t matter for the Consolidated Statement of Financial Position where we deduct the ( 20% x $80,000 ) $16,000.

      We can deduct from the nci in Dimitri or from the nci in Matis. In either situation, the nci will have $16,000 deducted representing their share of the cost of the investment by the subsidiary in the sub-subsidiary.

      Sorry that that inconsistency has arisen, but thank you for pointing it out

    • Profile photo of MikeLittle says

      @syedwaqar, Why are you looking at W4B? That’s the working to calculate the nci’s share of this year’s subsidiary retained earnings but the question is asking only for the Consolidated Statement of Financial Position.

      The calculation for W4A is:

      nci’s value as given in the question, less
      nci’s share of the cost of the investment by the subsidiary in the sub-subsidiary, plus
      nci’s share ( 52% ) of the sub-subsidiary’s post-acquisition retained earnings, less
      nci’s share of the impairment of the sub-subsidiary’s goodwill ( if valued on a fair value basis )

  5. avatar says

    Sorry for late reply sir…i was stuck studying other acca papers

    its harder for me to understand……if we are ducting 20% OF 60% from NCI investment….so NCI investment left at 40% thennnn…

    for investment of 40 % in a company…..should investor get 52% share of post acquistion profits???? its really hard for me to understand …..

    sorry again for being late

    • Profile photo of MikeLittle says

      @syedwaqar, NOOOO!!! 20% of 60% is 12 ( and not 20! ). That’s the value of the indirect non-controlling interest. Add that to the 40% direct non-controlling interest and you arrive at 52% total non-controlling interest


  6. avatar says

    I want to know about working 4b…..if we are deucting 20% of 60% from investment of NCI …so that investment gets to 40% ….then why we are giving extra 20% of 60% out of profits for investment of 40% ….for 40% investment we are giving 52% profit

  7. avatar says

    Hello Sir. Can that share of 20 % deducted in NCI calculation of Vitalis can alternatively be deducted from NCI calculations of Dimitrys instead of Vitalis as my teacher taught me that way. Kindly guide me please. Thank you.

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