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Hi Mike,
Why when calculating NCI post acq, we add the following:
– NCI @ DOA
– Share of post acq RE as per % of NCI
– PLUS (this is what puzzles me) Share of property revaluation gain as per % of NCI?When calculating the CRE for the group, the subsiadiary’s property revaluation gain was not included in the CREs, which is why I don’t understand why it IS included in the NCI revaluation.
This is problem 123, Plastik, on the BPP Revision kit for reference.
As always thank you for your work.
Ismael
The nci are entitled to their share of the subsidiary’s assets, calculated as:
value of their investment as at date of acquisition +
their share of any increase in the value of those assets –
(their share of any goodwill impairment)
That second line – “their share of any increase in the value of those assets” – could alternatively be written as “their share of any post-acquisition movement in shareholders’ funds” and that includes movement in all the subsidiary’s reserves whether they be retained earnings, revaluation reserve, game reserve, plant replacement reserve, general reserve ….
The nci want their share of the post-acquisition movement in ALL of these subsidiary reserves
Fortunately, in F7, it would be most unusual to find any more that retained earnings and revaluation reserve. But if, extraordinarily, there were more than just those 2, the others are treated in exactly the same way – consolidate the group’s share and allocate the nci’s share to them in working W5A
OK?
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