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In BPP book mention the ways to caculate NCI.
Profit after Tax of Subsidaries S. Co
Less Unrealised provide
Less Profit on Disposal of NC
Less Additional Depreciation FV uplift (1)
Add Additional dept following disposal of NC (2)
Could you give me examples to distinguish between point (1) and (2).
Many thanks and regards,
Hi
No, I can’t.
I would if I could but I don’t know what BPP is referring to
The only thing I can imagine that would fit is a combination of two factors.
First, (Less Additional Depreciation FV uplift (1)) there has been a fair value adjustment on the acquisition of the subsidiary. The fair value adjustment was an increase over the carrying value and the asset is still within the possession / ownership of the subsidiary.
If that’s the case, there needs to be an adjustment to the year’s profits for the subsidiary. the adjustment is to deduct the (notional) additional depreciation for the year calculated on the fair value increase
Second, there has been a transfer of TNCA from subsidiary to parent at a profit therefore involving a pup adjustment on consolidation.
The adjustment is calculated as “profit on transfer less the “extra” depreciation that has been charged on that profit on transfer” If you can accept that the profit on the transfer (the pup) needs to be deducted from the subsidiary’s profits, then maybe you can also see that the depreciation on the pup needs to be added
But that’s the only thing / combination of things that would explain the alleged BPP way of calculating the nci
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