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Hi, sir
I understand that while for consolidated statement of Comprehensive income stops at the profit after tax, I would like to proof this example by comparing the figure from deducting the NCI share of retained earnings and parent’s dividends with the W3 Retained Earnings figure but I can’t seem to get both sides to be the same? I hope you can point me in the right direction.
These are my workings:
After obtaining the Consolidated Statement of Comprehensive Income profit after tax to be 4554. I calculated the Parent(Maris) dividend to be 1500 +( 400 x 28% )= 1612.
Then for W4B NCI ( 72%) , I calculated it to be 2300 x 78% =1656so the final figure would be 4554 – 1612 -1656 =1286
For W3 Retained Earnings,
Maris : 3910 – 1500 + 112 + 532 = 3054
112 is the dividend from Girts for Maris share that is not accounted for 400 x 28%=112
532 is Maris share of post acquisition earnings from Girts. (2300- 400) x 28%=532
Please help to point out my mistakes.
Thank you.
Hmm – first of all, there is NO NCI! All the subsidiaries are wholly owned an the investment in Maris is only 28% so Maris is an associate and not a subsidiary.
Secondly, in calculating the dividend, only 1,500 is relevant. The 28% of 400 is INCOME not an outgoing
Thirdly, what are you going to do with the 78% of Maris that belongs to the other investors? It has no place in the consolidation of the GIrts group
Fourthly, in arriving at 4,554 you have brought in Girts’ share 28% of Maris after tax profits (2,300). So how come you’re trying to bring them in again
Now, if you’re trying to arrive at retained earnings for the year in the consolidation, that would be Girts’ retained earnings per Girts’ own statement of profit or loss (3,910 per question, + 112 dividend from Maris) a figure of 4,022 added to which is Girts’ share of Maris retained (ie 28% x 2,300 – 400) 532 giving a total of 4,554. From this figure is deducted the Girts’ dividend of 1,500 leaving 3,054 retained earnings for the year
Is that better?
oh, actually, I mistyped 72% as 78%, I was trying to calculate W4B NCI share which at that point of time I thought there was NCI.
I think my mistake here is that I thought that there would be a NCI share in this chapter.
Okay, I think I understand better now. thank you.
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