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NCI & Intra group interest

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › NCI & Intra group interest

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • November 14, 2017 at 12:04 pm #415710
    noman0409
    Participant
    • Topics: 16
    • Replies: 15
    • ☆

    Brigham has owned 70% of Dorset for many years. It also holds a $5 million 8% loan note from Dorset. One of Dorset’s non-current assets has suffered an impairment of $50,000 during the year. There is a balance in the revaluation surplus of Dorset of $30,000 in respect of this asset. The impairment loss has not yet been recorded. The entity financial statements of Dorset show a profit for the year of $1.3 million.

    What is the amount attributable to the non-controlling interests in the consolidated statement of profit or loss?

    In the solution, intragroup interest is reduced from profit of subsidiary.
    -Profit for the year 1,300
    -Intra-group interest (5m × 8%) (400)
    -Impairment (50,000 – 30,000) (20)
    -Total 880

    -NCI Share 880× 30% 264

    Is it right? As per your explanation in last post, the individual figures are not affected and cancellation is just for consolidation purpose.

    I am confused that which point I am missing here?

    November 14, 2017 at 1:04 pm #415733
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23316
    • ☆☆☆☆☆

    Does it show anywhere in the question that the loan interest has (or has not yet) been paid by Dorset to Brigham for the year

    My bet is that this interest has not yet been paid and has not already been deducted in arriving at Dorset’s profits

    Am I correct?

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    Posts
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