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NCI on proportionate on net assets

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › NCI on proportionate on net assets

  • This topic has 1 reply, 2 voices, and was last updated 9 months ago by mrjonbain.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 28, 2022 at 10:41 pm #654574
    alawi sayed
    Participant
    • Topics: 152
    • Replies: 166
    • ☆☆☆

    Hello Mr Chris ,

    How are you,

    In the following example there is an impairment of goodwill
    But the issue is the calculation of NCI ,
    I found in the answer that they calculated the the NCI by taken orginal subsidiary Capital + retained earnings at ACQ x 30% and thats really correct
    ,which gives 82500

    But in the year end NCI now here we have to take the original capital of subsidiary +post acq profit x 30%

    or we have to build up on the total of the NCI at acquisition which was 82500
    +200000-125000=75000*30% =22500 less imp of goodwill (50000 x 30%)15000=7500
    then the toal =90000

    please help in this as it is comfusing,

    Thanks,
    ———————————–
    Q

    Watts Co acquired 70% of the sh are capital of Pilkington Co on 1 January 20X2 for
    $300,000.
    The goodwill arising on consolidation has been impaired by $50,000 as at 31 December
    20X5.
    The share capital and reserves of the two companies as at 31 December 20X5 were as
    follows:
    Watts Co Pilkington Co
    Share Capital $400,000 $150,000
    Retained earnings $300,000 $200,000
    At the date of acquisition Pilkington Co had retained earnings of $125,000. Watts Co
    measures the non-controlling interest as the proportion of net assets of the subsidiary.
    In the consolidated statement of financial position of at 31 December 20X5 what amount
    should appear for the non-controlling interest?
    A $105,000
    B $90,000
    C $82,500
    D $60,000

    Answer

    NCI at acq= 30% * 275,000 = 82,500

    NCI=
    82,500
    Retained earnings= 200,000-125,000= 75,000*30%= 22,500

    Less Impairment= 50,000*30%= (15,000)

    TOTAL= 82,500+ 22,500 – (15,000) = 90,000.

    April 29, 2022 at 2:36 am #654580
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1580
    • ☆☆☆☆☆

    This forum is primarily designed for students to help one another. If you want to ask the tutor something directly please use the ask the tutor forum-

    https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-financial-reporting-fr-exams/

    Hope this helps.

  • Author
    Posts
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