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Rooney Co acquired 70% of the equity share capital of Marek Co, its only subsidiary, on 1 January 20X6. The fair value of the non-controlling interest in Marek Co at acquisition was $1·1m. At that date the fair values of Marek Co’s net assets were equal to their carrying amounts, except for a building which had a fair value of $1·5m above its carrying amount and 30 years remaining useful life.
During the year to 31 December 20X6, Marek Co sold goods to Rooney Co, giving rise to an unrealised profit in inventory of $550,000 at the year end. Marek Co’s profit after tax for the year ended 31 December 20X6 was $3·2m.
What amount will be presented as the non-controlling interest in the consolidated statement of financial position
of Rooney Co as at 31 December 20X6?The answer is $1,880,000.
i have already understand the basic to get the answer which is by deduct the unrealised profit and depreciation. but i cant understand why they did not add building which had a fair value of $1·5m above its carrying amount from those calculation.
I hope you can help me to understand this matter. Thank you so much sir 🙂
Hi,
The fair value of the building has not changed since the date of acquisition. the only change has been for the additional depreciation. There is therefore no post-acquisition change in net assets/retained earning in relation to the fair value and hence it is ignored.
Sometimes using the standardised working can help answer this type of question. So here you would be using the net assets working and the NCI working.
Thanks
oo okay understand now, thank you for your explanation !
have a good day sir ! 🙂
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