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IAS 21: Effects of Changes in Foreign Exchange Rates – NON CONTROLLING INTEREST

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 21: Effects of Changes in Foreign Exchange Rates – NON CONTROLLING INTEREST

Viewing 5 posts - 1 through 5 (of 5 total)
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  • June 19, 2017 at 7:22 pm #393553
    hanningtonsserwadda
    Participant
    • Topics: 27
    • Replies: 20
    • ☆

    Hello Mr. Thanks for your assistance always.
    Now my question is on how to compute the NCI in Business Combinations where we have to translate financial statements into the presentation currency of the parent company when NCI is measured at the proportionate share of the net assets of the subsidiary.

    Do we subject the NCI % share on the translated net assets of the subsidiary? OR
    NCI at acquisition + NCI share in post acquisition profits of the subsidiary.

    Thanks

    June 22, 2017 at 10:16 am #393775
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7079
    • ☆☆☆☆☆

    Hi,

    Thanks for the kind comment, always glad to be of assistance.

    To calculate the NCI we start by calculating the net assets of the subsidiary in the overseas currency in the net assets working. Do not do any translation yet.

    The NCI can then be calculated in the usual fashion by taking the NCI at acquisition and the NCI share of the post acquisition movement in net assets, both of which are taken from the net assets working in the overseas currency.

    Once you have calculated the NCI in the overseas currency then you can translate into the presentation currency of the group using the closing rate.

    This method works for both the fair value method and proportionate share method,

    Hope this clears up any confusion.

    Thanks

    June 22, 2017 at 3:15 pm #393817
    hanningtonsserwadda
    Participant
    • Topics: 27
    • Replies: 20
    • ☆

    Okay. Thanks. Let me work it out.

    May 19, 2020 at 4:10 pm #571267
    elsayedsharaf
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    could you please explain by example

    May 20, 2020 at 5:20 pm #571339
    Stephen Widberg
    Keymaster
    • Topics: 15
    • Replies: 3355
    • ☆☆☆☆☆

    YOUR QUESTION

    Now my question is on how to compute the NCI in Business Combinations where we have to translate financial statements into the presentation currency of the parent company when NCI is measured at the proportionate share of the net assets of the subsidiary.
    Do we subject the NCI % share on the translated net assets of the subsidiary? OR
    NCI at acquisition + NCI share in post acquisition profits of the subsidiary.

    MY ANSWER

    The exam has changed a lot in the last 3 years!
    You no longer have to full consolidations. FX questions will probably ask you to calculate Goodwill and XD reported in OCI.

    If you were asked NCI – use at acquisition plus % of post acquistion profits plus % of XD on retranslation of opening net assets and profits plus % of XD on translation of goodwill (but only if using full goodwill method)

    If you want to look at relevant examples look back at our course notes and on-line lecture.

    But, as I said, the emphasis in the new syllabus is on explanation not calculation – any calculation marks are given for approach.

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