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Greetings
P2 Example 4 solution on page 231 Workings, line-item of “K’s Share of Investment in Liene” 30% of 400! why are we saying that the NCI in Liene for K’s investment is 30% and Liene’s total value is 400?
Please explain to me clearly and the reasons too.
Hi,
I presume you mean the 70% of 400,000 and not 30% of 400,000 in the goodwill working as I can’t see it mentioned as 30% in the answer, unless I’m missing something.
When we’re calculating the goodwill in the sub-subsidiary we need to take P’s share of the investment that S has in SS, so here it is 70% of the 400,000. This is because the shareholders of the parent own their share of the subsidiary and so are only interested in what they own in the group accounts.
Hope this helps.
Thanks
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