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Dear Sir,
Hope you are keeping well, I would like to ask you a question to clear my doubt. So, for chapter 23 practice questions part 2 (Consolidated Statement of financial position) question 1. For the fair value of NCI, I took (10/90 x 21 600)= 2400. Is it a coincidence or we should absolutely take (10/100 x share capital of subsidiary to calculate fair value of NCI).
Kind Regards,
ZaazouIt is not a coincidence, but it is because the shares were acquired on incorporation.
So, to calculate the fair value of NCI,
We calculate it like 10/90 ×21600
Or 10/100 ×24 000?
Can you tell me the formula of calculating the fair value of NCI ?
lets say NCI is 10%
We should take 10/90 multiply by which figures ? Is it retained earnings of S or share capital of S?
I watched the lectures but im confusing since the figures are the same tht is the investment cost, share capital n retained earnings
Thank you in advance for ur responseYou should not learn things just as formula – it is too dangerous because the examiner is always trying to test your understanding.
If they paid $21,600 for 90% of the shares, then the value of all of the shares must be 21,600 / 90%.
So the value of the NCI’s shares must be 10% x 21,600/90%.
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