- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
- Posts
60% subsidiary was acquired in the mid of year
At start of year, $800,000 loan to subsidiary by Parent @ 5%Income Statement (Extract at year end)
–Finance Income: 50 (Parent), Nil (Subsidiary)
–Finance costs: 200 (Parent), 70 (Subsidiary)My Workings
-Consolidated statement
–Finance Income 50-20*=30
–Finance Costs 200+ 70*(6/12)-20*= 215
* 800000*5%*6/12NCI calculation
-Profit for year 610*6/12=305
-Unrealized profit= (10)
-Additional depreciation= (5)
-Finance cost**= 20
Total 310
NCI (310*40%)= 124** I added back finance cost as because of intra group loan, finance cost was reduced and hence increasing profit of subsidiary.
But in solution, finance cost was not added back?Cancelation takes place as a presentation exercise
So far as that subsidiary is concerned, it has borrowed money and incurred an expense
So far as the parent is concerned it has lent money and earned a return on that loanBUT when we consolidate we treat the two as though they were a single entity
So, FOR THE PURPOSES OF PRESENTING THE CONSOLIDATED FINANCIAL STATEMENTS ONLY, we eliminate the intra-group figures
Cancel interest charged against interest income
Cancel loan asset against loan liability
But for the individual companies we don’t adjust their figures. Only the group figures are affected
OK?
- The topic ‘NCI for consolidated statement of Profit or loss (My workings)’ is closed to new replies.