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Hi Mike,
Could you pls help as above – Sergijus+Indra, S bought further 25% share from Nci of I at a cost of $500,000. I am confused about this $500,000. Who did pay for it? When I study the statement of changes in Equity, why $500,000 being deducted from Nci, not S?
And b/f of RE for S is 1,450,800, how it come?
Thanks,
QinWe increase the nci entitlement by $39,445 and then pay them $500,000. They are “giving up” their entitlement to $461,555 net worth of the subsidiary in exchange for $500,000. So they make a “profit” on the deal of $39,445
Having credited them with that profit, we now pay them the full $500,000
Retained earnings at the end of the year are shown as $1,380,000 and that is after crediting retained earnings with the earnings retained this year of $70,000. Therefore the brought forward amount must be $1,380,000 less $70,000 = $1,310,000 for Sergijus
the same principle applies the the figures used in the Indra calculation
ok?
I understand the bf of RE now $1,310,000. Thanks.
But how $461,555 comes out? and $500,000-$461,555=$38,445. Can you show me your details of working?
Thanks,
QinOne more question: example 4 of chapter 4 Raimonda.
W3B gain in group, why value of NCI @DOD is $141,125, if it is 20%of NA@DOD, it should be $713,625×20%=142,725.
Any why after selling 60% of D, R’s share in D is 32%?
Could you pls give some details on it. Thanks, these examples are really good to practice. I found my brain stops working when doing them.
Thanks,
Qin
$461,555 is my calculation error when I was posting the reply. The workings show that the “adjustment to parent’s equity” amount is $39,445 and the amount payable for the increased acquisition is $500,000.
In my haste to answer you, I deducted $39,445 from $500,000 and arrived (wrongly) at $461,555. It should of course be $460,555
I need to check the question Raimonda so I shall get back to you on that.
However, re your final point, Raimonda sold 60% of her holding in Dainius. Before disposal, she held 80% of Dainius and 60% of 80 is 48
Thus her holding in Dainius fell by 48 from an 80% holding down to a 32% holding
Is that ok?
Got u. The 60% sold out from 80% control.
Still confused on your note: “adjustment to parent’s equity” amount is $39,44″, in the answer note it is 60,445. I am stuck on this step.
Thanks,
QinHi Qin
In my copy of the notes, downloaded from this site just two minutes ago, the figure for the adjustment to parent’s equity is repeatedly shown as $39,445 (see pages 216 W3, 216 W3B, 217 W4A and 217 Statement of Changes in Equity)
?
OK?
Hi Mike,
In all pages you are talking about “the number of adjustment to parent’s equity” is still 60,445. I also downloaded again just a few mins ago. Anyway, I understand the concept you are talking about now after I read your answer to me again. S paid 500k to gain this 25% from nci, nic making a profit on it. For S, they concluded 80% past-acq profit from I, so it’s fair. Thanks. 🙂
Now I’m really worried! I checked the P2 notes just minutes before I posted and the figure in the answer that I read was clearly $39,445.
????????
Something I shall need to check with Admin when he returns from his Easter break!
Thanks, can you give step by step how $39,445 comes out? coz in my note, I can’t figure it out, but $60,445 is very clear shown.
Thanks,
QinThe value of the 45% nci at date of our original acquisition is 676,000 per working W2 Goodwill
The value attributable to the nci post acquisition is their 45% x (1,620 – 1,280) = 153,000 and we are acquiring 25 parts of that 45% ie 5/9 x (676,000 + 153,000) = 460,555.
In order to finance this, we are paying the nci 500,000 to acquire 460,555 worth of assets. Hence the adjustment to parent’s equity of 500,000 – 460,555 = 39,445
OK?
Got u, year end post acq. R.E.820- @DOAR.E.480=340, for 45% NCI. OT notes now is wrong. right 🙂
it’s on page 216, The value attributable to the nci post acquisition is their 45% x (1,620 -84–1,280).
Thanks,
Qin
In working W3B “nci value at date of original acquisition 45%(1620 – 1280)” should not show the “45%(1620-1280)”
I cannot see in my downloaded copy of the notes, page 216, the line you have quoted “The value attributable to the nci post acquisition is their 45% x (1,620 -84–1,280).” In particular, I don’t see where the “-84” is in the notes
However, if you are now happy where the figures are from, then that’s ok
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