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Hi John,
Hope all is well. I am confused with this question. This is my attempt but it is incorrect, can you tell me where I am going wrongATTRIBUTABLE TO:
Shareholders of P = 240,000
N.C.I = (10% x 60,000) = 6000
Total = (70,000 + 60,000) =130,000I only have the current edition of the BPP Revision Kit, and question 26.22 in the current edition of the BPP Revision Kit does not have any of those figures and no company P. So it is impossible for me to check what you have done.
Sorry about that. This is the question I am referring to.
Tin Co acquired 90% of the equity share capital of Drum Co on 1 April 20X3. The following information relates to the financial year to 31 December 20X3 for each company.
Retained earnings at 1 January 20X3
Tin Co. 840,000
Drum Co. 170,000Profit for the year
Tin Co. 70,000
Drum Co. 60,000Retained earnings at 31 December 20X3
Tin Co. 910,000
Drum Co. 230,000Neither company paid any dividends during the year.
What profit is attributable to the parent company in the consolidated income statement of the Tin Group for the year to 31 December 20X3?
A. $124,000
B. $110,500
C. $115,000
D. $83,500You have made two mistakes. Firstly, I have no idea where you got the figure of $240,000.
Secondly, Tin only acquired share in Drum on 1 April, so only 9 months (or 3/4) of Drum’s profits for the year are after the acquisition.
So the total consolidated profit for the year is 70,000 + (3/4 x 60,000) = $115,000.
Of this, 10% x 3/4 x 60,000 = $4,500 is attributable to the NCI, and therefore 115,000 – 4,500 = 110,500 is attributable to the shareholders of the parent company.
(The 110,500 can be checked as being 70,000 + (90% x 3/4 x 60,000) = $110,500)
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