Dear Sir,
I calculated NCI for the above question using the following methods.
NCI (Net assets in balance sheet that doesn't belong to parent)
Share capital = 9000
Retained earnings (8600-1500+500-200) = 7400
Revaluation Reserve = -2500
Total = (9000+7400-2500) 13900×40% = 5560-520 (520 is from NCI FV minus acquired NAME by NCI)= 4680.
I realise that if I need to get the answer in the markscheme, my retained earnings has to be 7100. Could you explain to me if my method above is correct and if so what error I've made and how to arrive at the correct retained earnings figure?
Also the working is long just for 2 marks, but doing it this way makes the consolidated RE calculation much easier for me!
Sorry for the lengthy message!
Thanks in advance!
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Sample March/June 2016 - Zanda
9y ago#1NCI at date of acquisition:
Retained earnings brought forward were $8,600
Loss for the 6 months pre-acquisition were 6/12 x $(3,000) = $(1,500)
So retained earnings at date of acquisition were $7,100
Does that do it for you?
But for NCI aren't we supposed to take the retained earnings as of the balance sheet date?
9y ago#3It depends which nci you are calculating
We need a valuation for nci as at date of acquisition and we need another valuation as at date of financial statements
Which one are you looking for?
The question says - "prepare the following extracts form the consolidated statement of financial position of Zanda as at 31st of March 2016" (Acquisition was on the 1st of October 2015, so I believe I'm looking for the NCI as at the date of the financial statements
9y ago#59,000 shares x 40% x the fair value of each share - you haven't told me the share value as at date of acquisition
+ nci share of post-acquisition results =
40% x $(1,500) (were there any adjustments? Your post doesn't give me any details)
and that total will give you the nci value as at the accounting year end - subject to there being no impairment of goodwill
Got it! Thank you very much sir. One more question, how would I have to calculate NCI supposing they don't value NCI at fair value and use the proportionate method instead?
9y ago#7Calculate the fair value of the subsidiary's net assets as at acquisition date and apply the nci percentage to arrive at the nci value
This is well covered in the video lectures
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