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Dear Mike
Hello Sir.
Hopefully u had nice lunch.
Cut to the chase.
Cameron plc acquired a 60% holding in Clegg Ltd many years ago.
At 31 Dec 2009 Cameron plc held inventories with a carrying amount of $10,000 purchased from Clegg Ltd at cost plus 20%.What is the effect of the above transaction on the consolidated statement of profit or loss for the year ended 31 Dec 2009?
Here below my working
DR..Retained FOR SUBSIDIARY.1666.67
CR INVENTORY…………….1666.67so in the working called W4B
subsidiary profit for the period × nci40%
Less
Pup only Subsidiary seller nci%
40% × 1666.67= 666.67
Depn nci%
Imp nci%Based on the above working,
Ptofit attributable to Non controlling interest reduce by $667But the answer is
Profit attributable to Owners of Cameron plc reduce by $1000
Ptofit attributable to Non controlling interest reduce by $667I’ve tried several questions related to CSOPL but i haven’t seen the working that deduct (pup×parent%).
Where do they deduct that number?
Cost of sales, operating exp?Just i want to see the working where pup×parent% is deducted.
U don’t know how much i appreciate for your answers really thank u
and sorry to bother u on weekends.Regard
Your student HanSay the subsidiary’s pre-adjustment profit was $30,000
With no adjustment, that would be $18,000 for the parent and $12,000 for the nci
The BPP / Kaplan method then deducts the appropriate proportions from the consolidated retained earnings and the nci ($1,667 * 60% for the parent and 1,667 8 40% for the nci) leaving us with adjusted figures of $17,000 (that’s $18,000 less the $1,000 parent’s share of the pup) and $11,333 for the nci
Now try this:
instead of allocating proportions of profits and then making the adjustment for pup, do that adjustment first
So we have $30,000 pre-adjustment subsidiary retained earnings then deduct $1,667 to leave us with $28,333 post-adjustment profits
60% of that goes to the consolidated retained earnings (60% * $28,333 = $17,000) and 40% goes to the nci (40% * $28,333 = $11,333)
I believe that that fits with your posted solution and, personally, I find that much, much easier
Better?
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