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Kaji
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While calculating new NCI in case of further acquisition of shares in Hulme, we calculated new NCI based on NCI calculated before change i.e. New NCI = 56/0.40*0.3.
However, in case of disposal of shares of Jones, we didn’t calculate new NCI in the same way i.e. 14/0.10*0.30; rather we calculated by adding (120+23)*0.20 to the NCI calculated before ownership change i.e. 14. Why is it so?
P2-D2
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Hi,
On the acquisition of shares the NCI is being reduced from what it was to what it now needs to be, so given the reduction is from what the NCI was previously valued at we start using the old NCI and looking at how much each percentage was worth .
On the disposal the NCI is being increased from the share of net assets, so we calculate the NCI from what all of the net assets are worth.
Hope this helps, it is one of the more challenging aspects of group accounts and takes a bit of time to masted but if you keep working the questions then you will be fine.
Thanks
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