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I wanna ask a question about Non controlling interest. The case as following:
Subsidiary has a NCA that had a revaluation surplus after acq’n date: $3
Now it suffers an impairment loss being :$5
I understand that $3 will be charged to RS fist then the remaining $2 will be charged to PL of Sub
It’s obviously that NCI takes a proportion in the $2, How can account for the $3 RS, whether NCI will take a chance for any reduced Sub’s net assets? Thank in advanceIf the asset was revalued after acquisition, then the revaluation would have been split between the non controlling interest and the revaluation reserve as part of other comprehensive income. Therefore if the revaluation reserve for this asset is $3, the actual revaluation must have been higher. For example if the parent owns 50%, the actual revaluation was $6, with the NCI increasing by $3 and the revaluation reserve increasing by $3.
The $5 impairment will be split between the non controlling interest and the parent as per the ownership split in the same way. If the parent’s share of the $5 is higher than the $3 held in the revaluation reserve then the entire $3 will be removed and the rest will go against profit/retained earnings, but for the NCI there is no distinction between OCI and profit so the NCI will reduce by the NCI ownership percentage multiplied by $5.
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