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Hello i have a question about movement in equity where a company purchases some % holdings from nci
It is said that if the purchase consideration is greater than the fv amount of nci acquired, there will be a -ve movement in equity.
How can this be a -ve movement since in the SOFP equity will increase while nci figure will decrease.
Can u explain please ?The NCI figure will be decreased by X suppose.
We are paying X+ Sth for the decrease( Suppose X plus $2 million)Thus our Controlling Interest Figure is decreased by $2 million.
yea i agree with you but this doesnt explain why it is a -ve movement in equity since the acquirer company will have equity going up.
purchase consideration > Fv nci acquired = -ve movement in equity
Purchase consideration < Fv nci acquired= +ve movement in equity
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