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June 2014 Question 1 : Increase in NCI in Nathan

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › June 2014 Question 1 : Increase in NCI in Nathan

  • This topic has 4 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 5 posts - 1 through 5 (of 5 total)
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  • November 16, 2015 at 12:03 pm #282818
    Sheryar
    Member
    • Topics: 33
    • Replies: 18
    • ☆☆

    Consolidation question 1 of June 2014 Exam , i have a doubt on increase in NCI figure of Nathan as in the answer they have taken the % decrease x carrying value of the investment .

    But in Kaplan text its given that in case of increase in NCI , u take % increase x (Fair value of net assets + goodwill (ALWAYS)), when i am doing it according to this method i am getting increase in Equity of 6.3m whereas answer as per the other method is 5.3m

    So can you please help me to understand this issue?????

    November 16, 2015 at 12:08 pm #282822
    Sheryar
    Member
    • Topics: 33
    • Replies: 18
    • ☆☆

    sorry in examiner answer its Carrying value of investment x (% increase/total interest), i get this point but in kaplan text this method is given for decrease in NCi and for increase in NCI ,i have already written above.

    November 16, 2015 at 12:19 pm #282830
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    Hi – you have me at a disadvantage in that I don’t have any Kaplan material to hand!

    The value of the nci, no matter at what date you are considering the issue is always going to be:

    Value as at date of acquisition +
    Share of post-acquisition retained earnings (and any other reserves increased since acquisition) –
    Their share of any goodwill impairment

    Does that formula not work in the question to which you refer?

    November 16, 2015 at 2:52 pm #282872
    Sheryar
    Member
    • Topics: 33
    • Replies: 18
    • ☆☆

    Actually the requirment (i) of the question was to make a consolidated statement of profit and loss , and when i calculated the gain on disposal(increase in equity) i got 6.3m(using formula : % increase x fair value of net assets + total goodwill) , whereas in answer it was 5.3m(using formula : % increase x carrying value of invesment )

    Requirement (ii) of the question was to explain how this increase in NCI is going to effect consolidated statement of financial position , as per examiner answer its effect in C.S.F.P will be 6.3 million , calculated exactly using same formula which i used for C.S.P.L

    so i am confused is it like , for C.S.P.L , we have to take carrying value of investment and for C.S.F.P , we have to take fair value of net assets plus goodwill ??????????

    November 16, 2015 at 6:43 pm #283092
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    Surely there are two gains on disposal – one in the parent’s own records and one for the group

    This is illustrated in the course notes in the question Diana and Liga (I seem to remember)

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