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When we make Consolidated SOPL
We subtract portion of NCI profit.
NCI profit for year = % of NCI x Profit of Subsidiary (less Unrealised Profit if Subsidiary is seller).
Why we do not subtract Unrealised profit when parent is seller.
When parent will sell something at cost+it’s profit so Subsidiary will record it as purchases then if sold so inventory is realised but if unsold so Subsidiary would have Profit for the year (in individual SUBSIDIARY SOPL) unrealised. We should subtract the overstated Closing Inventory like we do in CSOPL by increasing COS (decreasing Closing Inventory).
I hope I am able to convey my question.
I simply mean that we should find NCI profit for year by
% of NCI in Subsidiary’s Profit in Individual SOPL – Unrealise profit (no matter Subsidiary sells or Parent sells).
Thank You.In the calculation of total consolidated profit the PURP has already been dealt with (regardless of which company sold it to the other).
It is only calculating how much of this profit is attributable to the parent and to the subsidiary that we need to subtract in the calculation of the NCI if the subsidiary is the seller. Whatever is left is attributable to the parent, and the total consolidated profit is not changed.
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