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Hi all,
in this book, p174 shows up the answer for Pco and Sco.
We’ve got Total profit $57k which is $49.8 for the parent and $7.2 for the NCI ($18*40%). Ok, so $18 is derived from the profit of the subsidiary during 9 months.
Now, on p175, we use the total profit of the subsidiary ($40) over 12 months to calculate the NCI’ share and not anymore the profit for 6 months. So, we get NCI $8 instead of $4= 20%*$40*1/2.
Sorry for this presentation. I’m a bit confused…
Thanks for your answer.
we need to find out the retained earnings at acuisition .
now 40,000 is b/f retained earning as on 1.1.20X5 ( please note that both parent and sub have same year end ) but the parent acquired on 1.4.20X5 and three months hv been elpased since the year began , profit for the year ending 31.12.20X5 have been given as 24000 so if we assume that profit accrue evenly so 6000 relate to first three months jan – march so we add 6000 to b/f 40,000
Hope that makes sense .and
I dont understand from where do u bring six months when the pre acuisition period is just 3 months .
well i do not understand why dividend is dedeucted in calculating nci
shall be thankful if u or anyone else can expalin meThanks for your reply.
Actually, I get your point regarding the b/f retain earning (we add 3 months profit) .
However, At the level of the profit attributable to nci, we must prorate the profit over the month (meaning 9 months => so we get nci = 40%* profit over 9 month = 40%* 18). I guess I’ve answered your question 🙂
My question is on the next page (175). Why don’t we prorate the net profit for the nci?! it’s written “nci in Lamlash: 20%*40” which is equal to 20%* full profit over 12 months and not 6 month as it should have been the case.
So the question remains open…
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