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Kindly help me to understand the principle & the effect to both the parent and minority interest accounts.
Minority interests no longer exist – they are now called non-controlling interests!
The situation is that we have a subsidiary that is financed by two distinct sets of stake holder – the parent and the nci.
When the parent makes a further acquisition of shares in the subsidiary (or makes a part disposal of its investment) this is simply a movement of interest between the two sets of stakeholders. The movement is calculated as shown in my working W3B (in the videos) and is adjusted for in the Statement of Changes in Equity.
But it is important to realise that, in both situations, the parent had control BEFORE the transaction and AFTER the transaction
In the situation where the parent sells and loses control or acquires a further interest and gains control as a result of that further acquisition, then in those scenaria the parent has crossed the 50% control line and a profit or a loss is calculated.
Is that ok?
I understand that adjustment to parent’s equity takes place where there is tranfer of shares among company’s stakeholders which neither resulted in gain or loss of control, otherwise profit or loss is rather calculated.
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