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Hi,
I am confused about the adjustment to parents equity, where a company buys further shares in an existing sub. The journal is credit bank debit NCI debit parents equity with the balancing figure – while I can see why the NCI decreases I cant get my head round why the parents equity would also decrease. What is this representing?Hi,
If we are buying more shares and are paying more than what the NCI is worth then think of it as a loss on the transaction in the group accounts, in that the additional transfer needs to come from the group and so we use our accumulation of reserves. We couldn’t use any other balance held on the group SFP.
Thanks
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