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Dear sir,
Kindly I need clarification regarding business combination achieved in stages
Transaction between owners Incase of the parent acquiring additional interest in the subsidiary above 50%Nci share at transaction * (nci %/ nci sold %)
Why we do not simply multiply nci share by percentage of disposal.
Thanks
Hi,
The reason is that the NCI are effectively giving the parent some of their NCI ownership in the subsidiary and this NCI is only representative of what the NCI owns, i.e. it is not the entire subsidiary owned but what the NCI own of the subsidiary.
We therefore need to work out what each percentage of this NCI is worth and to do this we divide by the NCI% ownership. No we know what each 1% is worth we can then find out the amount transferred by multiplying by the additional ownership interest transferred.
Thanks
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