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Is it true that:
1) FV of NCI using net assets method consist of Total Equity items multiplied with NCI share of subsidiary net assets?
2) FV of NCI using Fair value method only consist of two items which defines the market value of the subsidiary owned by the NCI and they are share capital plus NCI shares of subsidiary Post-Acquisition profits?
3) Could you explain whàt items consist of FV of NCI and what exactly are they? I have trouble understanding how can we measure the FV of NCI?
Please explain
1) Yes, this is a short cut to give the same answer where we multiply the net assets/equity at the reporting date by the NCI%
2) To calculate the NCI using the FV method then we start with the FV at acquisition and add on any share of post-acquisition movement in net assets before then deducting the NCI share of any impairment.
3) The FV at acquisition will either be given in the question, or you calculate it based upon the share price of the subsidiary and the number of shares owned by the NCI.
Thanks
My questions are related to my previous questions.
1) This gives us the share value of the NCI?
2) (part a) Is it true that Fair value at acquisition is actually the market value of the shares of the NCI group at the acquisition date?
2) (part b) Is it true that post-acquisition movement in net assets/equity is caused by the post-acquisition profit (retained earnings) only whereas any decrease in their shares value is because of decrease in their assets (i.e. impairment) which happens because the market value of the assets are less than their book value (am i correct until here?) but does it include non-current assets/ intangible assets or all the assets combined (please mention?)
3) What you mean here is when it is not given then we calculate the FV of NCI based on Net Asset method (because we’ve not all the information) BUT if it is given in the question then it is calculated based on FV method which gives us different answer because of post-acquisition profits only (unless they both result in same answer)?
4) Is it also correct that the value of a subsidiary is actually its market value (or fair value) and it is assessed by the shares holding of a minority group called NCI?
I apologize for lengthy question 🙂
1) Yes, the shortcut gives you the NCI at the reporting date.
2) Yes, the FV of the NCI is the share price of the subsidiary multiplied by the number of NCI shares.
3) Yes, if you’re not given the FV of the NCI, or S’s share price then we have to use the net assets method.
4) Is this not the same question/scenario as #2?
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