land value increase in consolidation time

Hello Sir,

I don’t know why for the increase in land in consolidation time was not added to the carrying value of NCI in the following question. Because of the word on consolidation they didn’t say at acquisition

That’s why I think it should be added to the NCI value.

Please clarify Sir,

Thanks,
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Q

173 Pact acquired 80% of the equity shares of Sact on 1 July 20X4, paying $3 for each share
acquired This represented a premium of 20% over the market price of Sact’s shares at that
date.
Sact’s equity at 31 March 20X5 comprised:
$ $
Equity shares of $1 each 100,000
Retained earnings at 1 April 20X4 80,000
Profit for the year ended 31 March 20X5 40,000
––––––– 120,000
–––––––
220,000
–––––––
The only fair value adjustment required to Sact’s net assets on consolidation was a $20,000
increase in the value of its land.
Pact’s policy is to value non?controlling interests at fair value at the date of acquisition.
For this purpose the market price of Sact’s shares at that date can be deemed to be
representative of the fair value of the shares held by the non?controlling interest.
What would be the carrying amount of the non?controlling interest of Sact in the consolidated
statement of financial position of Pact as at 31 March 20X5?
A $54,000
B $50,000
C $56,000
D $58,000

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Answer
173 C

Market price of Sact’s shares at acquisition was $2.50 ($3 × 100/120), therefore non?controlling
interest (NCI) at acquisition was $50,000 (100,000 × 20% × $2.50). NCI share of the post?
acquisition profit is $6,000 (40,000 × 9
/12 × 20%). Therefore non?controlling interest as at 31
March 20X5 is $56,000