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Pact acquired 80% of the equity shares of Sact on 1 July 20X4, paying $3 for each share
acquired This represented a premium of 20% over the market price of Sact’s shares at that
Sact’s equity at 31 March 20X5 comprised:
Equity shares of $1 each 100,000
Retained earnings at 1 April 20X4 80,000
Profit for the year ended 31 March 20X5 40,000
The only fair value adjustment required to Sact’s net assets on consolidation was a $20,000
increase in the value of its land.
Pact’s policy is to value non?controlling interests at fair value at the date of acquisition.
For this purpose the market price of Sact’s shares at that date can be deemed to be
representative of the fair value of the shares held by the non?controlling interest.
What would be the carrying amount of the non?controlling interest of Sact in the consolidated
statement of financial position of Pact as at 31 March 20X5?
Dear Sir why Revaluation is not considered on calculation?
The assumption is that the land has not changed in value since the date of acquisition and so there is no post-acquisition movement and so no impact on the NCI. Remember that the NCI is calculated as the NCI at acquisition plus the NCI% of the post acquisition movement. If there is no post-acquisition movement then it is not considered in the calculation.