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I still don’t get it sir. Does it mean that ,
” NCI is valued based on share price ” ? But the NCI is valued based on fair value.
Therefore,
$1000 gain on investment.
The NCI % of $1000 will not be taken to the NCI(SOPL).$900 gain on investment.
The NCI % of $900 will be taken to NCI (SOPL) ?Is it because the $1000 relates to the the pre-acquisition period therefore we dont include the NCI% of it in the NCI(SOPL) . Likewise, $900 relates to the post acquisition period therefore we include the NCI% of it in the NCI(SOPL). Am i right sir ? In that case how will the valuation on NCI affect this ?
The question clearly says “(vi) Palistar’s policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose Stretcher’s share price at that date is representative of the fair value of the shares held by the non-controlling interest.”
How clear do you want this to be?
“The NCI % of $1000 will not be taken to the NCI(SOPL).” – CORRECT
“The NCI % of $900 will be taken to NCI (SOPL) ?” – NO
The gain of $900 is post-acquisition and goes to be shared by us and by nci either through statement of profit or loss or through comprehensive income, whichever is appropriate
But when a question says that “share price at that date is representative of the fair value of the shares held by the non-controlling interest” don’t go trying to amend that!
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